The Ministry of Roads and Urban Development will settle 10 trillion rials ($330 million at the official exchange rate) of contractors' overdue payments through treasury bills, the minister said Tuesday.
Abbas Akhoundi said contractors of road and rail transport projects would eventually receive 30 trillion rials ($992 million) of Islamic treasury bills by the end of the Iranian fiscal year (March, 2016), the ministry's website reported.
"Contractors received 5.5 trillion rials ($183 million) in treasury bills last year," he said, "Treasury bills and participatory bonds are widely welcome in the market. So in line with national budget projections for this year the amount will reach 30 trillion rials."
For the first phase of the payments 10 trillion rials of the bills are ready for distribution.
Major contractors poised to receive the treasury bills include the Construction and Development of Transport Infrastructure Company, Road Maintenance and Transportation Organization, Iran Civil Aviation Organization and the Islamic Republic of Iran Railways.
The bills are being issued to finance investment projects, the government secures it and they can be traded in Fara Burse (Iran's over-the-counter market), Akhoundi said.
The Economy Ministry issues Islamic treasury bills valued at 1 million rials ($33.7) a piece with one-year maturity and Bank Melli sells the bills electronically.
Local media has often reported that the government and many state and government organizations are in the red to the tune of billions of dollars pending from the former administration, especially money owed to thousands of contractors. Due to mounting economic problems and the steep decline in crude prices the government has defaulted both to state-owned banks and the army of contractors waiting to be paid for months with many on the verge of bankruptcy and unable to pay wages.
