Active Commercial AidData Chinese Aid

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

¥13.6M RMB

Funder	Export-Import Bank of China (China Eximbank)
Recipient Organization	China Railway Engineering Corporation (CRECG)
Country	Iran
Start Date	Jun 01, 2019
End Date	Jul 23, 2032
Duration	4,801 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`95736`

Grant Description

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).

📋 Loan / Grant Terms

💰 Loan Amountare 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.

📋 Staff Comments

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).
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.
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.
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).
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.
According to multiple media reports, the transaction amount is CNY 15.3 million and the interest rate is 35%. This issue warrants further investigation.

📚 Sources & References

Belt & Road Initiative expands China-Iran cooperation
China Lends Money For 'Uneconomical' Train Project In Iran
The Geopolitical Economy of Chinese Influence in Iran: Empire of Capital and Uneven Development, تله وام چینی
Warning Against ‘Chinese Debt Trap’, تعیین تکلیف طرح قطار سریع السیر اصفهان- قم- تهران بعد از ۱۶ سال
Tweet from @shokrani_maryam, جزییات تازه از وام چین به ایران؛ شرق درباره تله وامی هشدار داد, جزییات فاینانس چینی قطار سریع_السیر تهران-قم-اصفهان - ایسنا, وام تبهکارانه از چین با بهره ۳۵ درصد برای پروژه غیراقتصادیِ و خطرناک قطار پرسرعت اما با ریل_های فرسوده!
China pushing billions into Iranian economy as Western firms stall
Iran to draw $2.4bn Chinese credit line for Tehran-Isfahan high-speed railway, ¥13.6bn Chinese LC ready to be used for Tehran-Isfahan high speed rail
Ministry of Economic Affairs and Finance of Is : Iran Bank of Industry and Mine
China Exim Bank sign economic agreement
China seals $1.5bn Iran rail line electrification deal, بهره برداری از اولین قطار سریع السیر ایران با فاینانس چینی ها - خبرگزاری مهر _ اخبار ایران و جهان _ Mehr News Agency, عصبانیت اصلاح_طلبان از فاینانس ۱۵ میلیارد یوانی پکن در ایران_ چرا سرمایه_گزاری چین علی_رغم تحریم_ها خوش_آیند غرب_گرایان نیست؟_ روزنامه حامی دولت قبل_ پروژه قطار سریع_السیر گرفتاری_های زیادی دارد! _ پایگاه اطلاع رسانی رجا, روزنامه اقتصاد سرآمد _ قطار سریع السیر شاید روی ریل نرود!
Tehran–Qom–Isfahan high-speed rail
China Reopens $1.9b L_C for Tehran-Qom-Isfahan Railroad Project
China Railway Second Academy signed the survey and design contract for the Deyi high-speed railway project
China Railway International Group Service Area
伊朗电气化改造项目开工中伊高铁并未重启_公司频道_财新网
庞森大使考察中铁德黑兰—伊斯法罕高速铁路项目
Iran project for electrification transformation
China-Iran high-speed rail agreement not unfrozen
Invest in Iran 2018
Iran Business Time
China's EXIM inks $1.5B deal for high-speed rail in Iran
Iran to launch high-speed rail network - Mehr News Agency
Completing Tehran-Qom-Esfahan High-Speed Railway, نسخه چاپی مجوز صدور ضمانت نامه اختصاصي به مبلغ سه ميليارد و پانصد و نود و يك ميليون و سيصد و هفده هزار و سي و سه صدم يوآن چين بين بانك صنعت و معدن و اگزيم بانك چين, نیروگاه سیکل ترکیبی لامرد
Ghadir Lamerd power station
Global Perspectives on China’s Belt and Road Initiative
Assessing the Value of Market Access from Belt and Road Projects
伊朗财经部长与中国特使讨论扩大经济合作
Iran Launches 2.4 Billion Euro High-Speed Rail Project
Tehran-Qom-Isfahan High Speed Rail Project
China to provide Iran with high speed trains
Tehran-Isfahan High Speed Rail (Construction)
Chinese Global Energy FInance
China's EXIM inks $1.5b deal for high-speed rail in Iran
China's Sinomach to construct 410km railway in western Iran
Iran to draw $2.4bn Chinese credit line for Tehran–Isfahan high-speed railway
China to build a railway project in western Iran to boost transportation
China Finances Tehran-Isfahan High-Speed Railroad
China’s EXIM inks $1.5bn deal for high-speed rail in Iran
Islamic Republic of Iran Ministry of Roads and Transportation - Railway Transportation - unece
Iran launches $2.7bn high-speed rail project
Preliminary design of Qom-Arak High Speed Railway Line
Construction of High-speed Rail line Project in Iran
China to finance Iran’s northeastern railway construction project, $2.3b Chinese Deal Finalized for Iranian Rail Project
Gorgan-Bojnourd-Mashhad Railway, قرار داد پروژه راه آهن گرگان-بجنورد-مشهد به امضاء نهایی رسید
Under Study railway project, $2.3b Chinese Deal Finalized for Iranian Rail Project, قطار گرگان –مشهد با تأخیر می‌رسد/قیمت ارز ترمز پروژه را کشید, وام تبهکارانه از چین با بهره ۳۵ درصد برای پروژه غیراقتصادیِ و خطرناک قطار پرسرعت اما با ریل‌های فرسوده! Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.