China Eximbank provides RMB 13.6 billion loan — via EPCF arrangement — for 245 km Qom-Isfahan Section of the 410 km Tehran-Qom-Isfahan High-Speed Rail Project

In October 2010, the Chinese Government and the Government of Iran signed an initial agreement on the 410 km Tehran-Qom-Isfahan High-Speed Rail Project. However, due to the Iranian Government’s nuclear activities, the development of the project stalled. Then, on July 14, 2015, the Joint Comprehensive Plan of Action (JCPOA) — commonly known as the Iran nuclear deal — was signed. Two years later, in July 2017, China Eximbank agreed — at least in principle — to issue a loan to China Railway Engineering Corporation (CREC) through an Engineering, Procurement, Construction and Financing (EPCF) arrangement for the 245 km Qom-Isfahan Section of the 410 km Tehran-Qom-Isfahan High-Speed Rail Project. In June 2019, Noorollah Beyranvand, the Deputy Head of the Islamic Republic of Iran Railways (RAI), announced that China Eximbank had authorized the use of an RMB 13.6 billion ($1.94 million) loan for the 245 km Qom-Isfahan Section of the 410 km Tehran-Qom-Isfahan High-Speed Rail Project. The loan’s final maturity date was identified as August 2029 (implied maturity length: 10 years). The other borrowing terms of the loan are unknown. However, it is known that the borrower expects to make principal and interest repayments worth RMB 22.881 billion ($3.2 billion) — in nominal terms — over the lifetime of the loan. It is also known that the borrower is expected to use the proceeds of the loan to partially finance an RMB 15.3 billion ($2.3 billion) commercial contract with China Railway Engineering Corporation (CREC), which was signed in February 2015. As of July 2022, the loan had achieved an estimated disbursement rate of 29.4% (RMB 4 billion out of RMB 13.6 billion). The purpose of the project is construct a 245 km section of the 410 km Tehran-Qom-Isfahan High-Speed Railway that runs from Qom to Esfahan (Isfahan). Upon completion, the railway is expected to travel 250-350 km per hour and reduce the travel time from Tehran to Isfahan to 2 hours and transport 16 million passengers per year. ICREC is the general EPC contractor responsible for project implementation. Other companies that are involved in the project include Khatam Al-Anbia Construction, which is owned by Iran’s Revolutionary Guard, Siemens, and Italferr (the consulting arm the Italian national rail operator Ferrovie dello Stato). Construction began on or around April 15, 2015. 17 months later, on September 15, 2016, China’s Ambassador to Iran conducted an on-site project inspection. Then, after Iran’s Minister of Roads and Urban Development Abbas Akhoundi ordered the redesign of the railway route to make it more efficient compared to the previous design (including the relocation of the train stations in Tehran, Qom and Isfahan), a project (re)design contract was signed on November 27, 2016. The project’s originally expected completion rate was August 2021. However, as of May 2021, the project had only achieved a 5% completion rate.

Additional details

1. Some sources suggest that the loan may not have come from China Eximbank but from a CDB or CITIC Group credit line (https://www.reuters.com/article/uk-iran-nuclear-china-idUKKBN1DU2A8). 2. Some sources suggest that the loan agreement was signed in August 2017. Others suggest that it was signed between June 2019 and December 2019. For the time being, AidData assumes a loan commitment date of June 2019. However, this issue warrants further investigation. 3. In December 2019, the Governor General of Isfahan Province announced that the the $1.94 billion credit line from China Eximbank for the 410 km Tehran-Qom-Isfahan High-Speed Rail Project was reopened. 4. Under most EPCF (EPC+F) contractual arrangements, a loan is extended to the EPC contractor but with a sovereign guarantee from the host government. Therefore, AidData assumes that the loan issued to CREC is backed by a repayment guarantee from the Government of Iran (i.e. a sovereign guarantee). 5. This project is also known as the Qom-Esfahan Fast Train Project or Qom-Esfahan High-Speed Railway Project. The Chinese project title is 德黑兰—伊斯法罕高铁项目 or 伊朗德黑兰—库姆—伊斯法罕高速铁路 or 德黑兰-库姆-伊斯法罕高速铁路项目. The Persian project title is قطار سریع‌السیر قم - اصفهان or پروژه قطار سریع‌السیر قم - اصفهان.

Number of official sources

7

Number of total sources

34