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

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 Project 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.

Additional details

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.

Number of official sources

5

Number of total sources

22