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Overview

Chinese Government provides EUR 502 million loan for Lordegan Petrochemical Project (Linked to Record ID#41429)

Commitments (Constant USD, 2023)$683,039,038
Commitment Year•2014Country of Activity•IranDirect Recipient Country of Incorporation•IranSector•EnergyFlow Type•Loan

Status

Project lifecycle

Completion

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
May 31, 2014
End (actual)
Nov 26, 2020

Geospatial footprint

Map overview

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The purpose of this project was to construct a petrochemical plant — with the capacity to produce 2050 tons of ammonia and 3250 tons of urea a day — in Falard District (or Felard District or بخش فلارد‎) within Lordegan County and Chaharmahal and Bakhtiari Province. More detailed locational information can be found at https://www.openstreetmap.org/way/427341079.

Stakeholders

Organizations involved in projects and activities supported by financial and in-kind transfers from Chinese government and state-owned entities

Ultimate beneficial owners

At least 25% host country ownership

Funding agencies

State-owned Policy Banks

  • Export-Import Bank of China (China Eximbank)

Receiving agencies

Government Agencies

  • Central Bank of Iran

Implementing agencies

State-owned companies

  • Aviation Industry Corporation of China, Ltd. (AVIC)
  • Beijing Huafu Engineering Co., Ltd (HFEC)

Loan desecription

Chinese Government provides EUR 502 million loan for Lordegan Petrochemical Project

Interest type•Unknown

Narrative

Full Description

Project narrative

On May 31, 2014, the Chinese Government provided an EUR 502 million loan to the Central Bank of Iran (CBI) for the Lordegan Petrochemical Project. The loan that supported this project was likely drawn from the line of credit captured in Record ID#41429. The loan proceeds were to be used by the borrower to finance an EPC contract that was issued to HuaFu Engineering Co. (HFEC) and the Aviation Industry Corporation of China (AVIC). The purpose of this project was to construct a petrochemical plant — with the capacity to produce 2050 tons of ammonia and 3250 tons of urea a day — in Falard District (or Felard District or بخش فلارد‎) within Lordegan County and Chaharmahal and Bakhtiari Province. As of March 20, 2015, this project had achieved a 3% completion rate. By July 2017, it had achieved a 69% completion rate. The plant was officially inaugurated on or around November 26, 2020.

Staff comments

1. The Persian project title is تروشیمی لردگان. 2. Some sources report that the face value of the loan was EUR 504 million or EUR 470 million rather than EUR 502 million. This issue merits further investigation. 3. It is possible that the loan proceeds were on-lent by CBI to Lordegan Urea Fertilizer Company (LUFC), a subsidiary of Persian Gulf Petrochemical Industries Company (PGPIC). This issue merits further investigation. 4. The financier of this project is unknown. However, around the time that this project was financed, China reportedly owed Iran over $20 billion in oil payments. This funding was frozen in overseas banks after US-led sanctions made it difficult for Beijing to transfer money to Tehran. Iran and China reportedly reached a deal to settle some parts of the frozen money through China’s funding of Iranian petrochemical projects. Also, in 2017, a Vice President of China Eximbank reported (see "China’s EXIM Inks $1.5 bn High-Speed Rail Deal with Iran") that it had financed 26 electricity, petrochemical, oil and gas and nonferrous metal projects in Iran worth $9 billion. Therefore, China Eximbank is the most likely funder of this project.