Economy, Business And Markets

Russia to Lend €2.5b for Rail, Power Projects

Russia to Lend €2.5b for Rail, Power ProjectsRussia to Lend €2.5b for Rail, Power Projects

The total amount of Russia’s two loans to Iran is close to 2.5 billion euros which will be delivered in two weeks, Russian Deputy Finance Minister Sergey Storchak told reporters on Monday.

"The total sum of two loans (to Iran) is about 2.5 billion euros. The first one is slightly bigger, the second a bit smaller," he said.

Storchak said that usually parties set the highest and the lowest sums of a loan, Russian News Agency, TASS reported.

"We fix an upper limit on the potential costs of the Russian budget to fund the loan. The drawing of the loan will depend on the contracts, as they often change in the course of their implementation," he said.

According to him, the contracts are very complicated and complex. "Not all risks can be calculated on the development stage. For example, the risks related to railway, tunneling work. In the same mountainous area their cost can increase or decrease. Loan drawing depends on the contract and annexes to the contract, which are often signed," he said.

In April, Storchak said that the legal constraints to Russia’s loan to Iran had been removed and domestic agreements between different agencies in Russia would be reached quickly.

Earlier, he said that three issues regarding the two loans to Iran (to finance rail and power generation projects) are still open. According to him, the two loans are considered as pilot and are not linked to the $5 billion loan that was announced earlier.

In late 2015, First Deputy Prime Minister Igor Shuvalov said that the initial amount of public loan from Russia to Iran for the implementation of these projects is $2.2 billion while the total credit line would be $5 billion.

Russia’s Finance Ministry expects to get the cabinet’s permission on granting loans to Iran in two weeks.

"The intrastate procedures concerning the two loans are about to be completed, we will finish them soon. This is probably the matter of two weeks. As far as I know, the head of the Iranian delegation had the authority (to sign the agreement - TASS) from the very start. Simply they (Iran) have a different order of taking administrative decisions. I am authorized to hold talks but I don’t have the authority to sign," Storchak said.

He said that his ministry will receive permission to sign the agreement from the government in the next two weeks.

"And when the colleagues from Iran's Ministry of Economy and Finance are ready, we will find out, as always, at the right time and in the right place. I do not know how they would like to sign it. It may also be by correspondence."