Active Mixed AidData Chinese Aid

Chinese Government provides RMB 1.95 billion loan for Phase 1 of Karaj Metro Line 2 Project

¥1.95M RMB

Funder	Unspecified Chinese Government Institution
Recipient Organization	Karaj Urban and Suburban Railway Organization
Country	Iran
Start Date	Nov 01, 2018
End Date	Jan 03, 2027
Duration	2,985 days
Number of Grantees	1
Roles	Recipient
Data Source	AidData Chinese Aid
Grant ID	`95737`

Grant Description

Chinese Government provides RMB 1.95 billion loan for Phase 1 of Karaj Metro Line 2 Project In November 2018, an unspecified Chinese state-owned bank and Karaj Urban and Suburban Railway Organisation (KUASRO) — an Iranian state-owned company — signed an RMB 1,950,000,000 loan agreement for Phase 1 of the Karaj Metro Line 2 Project.

📋 Loan / Grant Terms

💰 Loan Amountare unknown

However, it is known that the borrower was expected to use the loan proceeds to finance a $420 million commercial (EPC) contract with CITIC Group Corporation Ltd.

The purpose of this project is to construct the first 15 km of Line 2 of the Karaj Metro, which upon completion will have a total length of 27 km.

The 15 km stretch runs from Khwarazmi University Square in the west of Karaj to Shahid Soltani Square in the east of Karaj. CITIC Group Corporation Ltd. is the EPC contractor responsible for implementation. As of September 2017, the project had achieved a 32.31% physical completion rate.

By April 2021, the 15 km stretch between Khwarazmi University Square and Shahid Soltani Square had been fully excavated.

However, international sanctions eventually slowed the project implementation efforts of CITIC Group Corporation Ltd., which led to litigation with the project owner (KUASRO). The project was originally expected to reach completion within 4-years of the start date of the EPC contract. However, the project has underperformed vis-a-vis the original objectives identified in the EPC contract.

📋 Staff Comments

Some sources suggest that the EPC contractor (CITIC Group Corporation Ltd.) eventually became the creditor, which implies that an EPCF (EPC+F) arrangement or a commercial contract with a deferred payment clause (i.e. supplier’s credit agreement) may have been reached. This issue warrants further investigation.
CITIC Group Corporation Ltd., formerly the China International Trust Investment Corporation, is a state-owned investment company of the People's Republic of China, established by Rong Yiren in 1979 with the approval of Deng Xiaoping. Its headquarters are in Chaoyang District, Beijing.
International sanctions slowed the project implementation efforts of CITIC Group Corporation Ltd., which led to litigation with the project owner [Karaj Urban and Suburban Railway Organisation (KUASRO)]. However, it is not clear if the loan agreement was ever cancelled. This issue warrants further investigation.
The Chinese project title is 伊朗卡拉季地铁2号线. The Persian project title is پروژه قطار شهری کرج or برای ساخت فاز اولخط ۲ متروی کرج.

📚 Sources & References

Karaj Subway Project Makes Slow Progress 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.