Taxi Replacement Scheme Facing Bank Hurdles

Taxi Replacement Scheme Facing Bank HurdlesTaxi Replacement Scheme Facing Bank Hurdles

Nearly 7,000 taxis have applied for and are waiting to receive loans to replace their vehicles, the head of Tehran's Taxi Organization said in a recent statement.

Meysam Mozaffar also criticized the lackluster performance of banks on the issue, claiming that they were stalling the loans, ILNA reported.  

"Recently, the government tasked three Iranian banks with paying loans worth 200 million rials ($5,700) to taxi drivers who wanted to exchange their old cars with new ones," he said.

No bank was mentioned in the report, however in prior announcements Shahr Bank (City Bank) was named as the institution that would provide the new loans.

In other reports regarding the purchase of new taxis, Parsian, Mellat and Tejarat banks were also named as facilitators of the scheme.  

According to Mozaffar, the government and the Central Bank of Iran's Credit Organization previously laid out the regulations and the amount a taxi driver should deposit for receiving the loan.

  Lenders Playing Hardball

The official noted that some banks, however, seem to have been asking for more hefty deposits before extending the loans.     

The banks require ownership documents of the old car and written pledges by two government employees whose salaries are over $570 a month (20 million rials) each for the driver. The installment will be deducted from the salaries of the pledgers if the taxi owner fails to pay.

Mozaffar also said that these requirements have complicated the process, as many taxi drivers have not been able to furnish these pledges.

"We hope to see these complications removed," he said.

Another issue impeding the process of replacing aging taxis, according to the official, is a difference of opinion between the Interior Ministry and Iran's largest carmaker Iran Khodro Company.

The official also said there were disagreements between the two entities over the fees charged for scrapping the old clunkers and receiving a certification for cars that have been taken off the streets, and who would profit from the scrappage metal.  

"Another issue at hand is that IKCO has hiked up prices of two models most frequently used as taxis in Iran: Samand and Peugeot 405 (two of the lower priced vehicles offered by the company)," he said.

In a separate development, an approval passed recently by the government stipulates that taxis manufactured before 2006 or those operating for over 10 years must be replaced with new ones.

As part of a one-year plan to tackle pollution in large cities, a 22-trillion-rial ($6.3 billion) fund has been allocated to upgrade the public transport fleet in metropolises like Tehran, Mashhad, Tabriz and Isfahan.

  Gov't's Auto Plans

The plan, which lays out the government’s one-year targets to battle air pollution, was approved last month and has been recently communicated to the relevant bodies. The implementation of this, however, has dragged due to ongoing confusion about its enactment.     

The government devised the plan based on recommendations made by the Department of Environment in 2014.

Several cities around the country have recently welcomed newer cars in the taxi fleet such as SAIPA's Ario costing taxi drivers 550 million rials ($15,700) and hybrid Toyota Camrys costing 1.5 billion rials ($30,000).