AIIB Ready to Support Iran Projects

The role of the Asian Infrastructure Investment Bank (AIIB) in Iranian economic projects was discussed in a meeting between the president of the China-based bank and the minister of roads and urban development.

Abbas Akhoundi who is in China at the head of a high-ranking delegation, met with AIIB President Jin Liqun late Tuesday, IRNA reported, with the latter expressing AIIB interest in funding Iranian development projects.

An international financial institution, the AIIB aims to support infrastructure development in the Asia-Pacific region. It was proposed by the government of China and consists of 57 member states or the so-called “founding members”.

The bank is widely regarded as a strong and emerging rival to western lenders, namely the International Monetary Fund and the World Bank, both headquartered in Washington. AIIB operates with a capital of $100 billion, equivalent to two-thirds of the capital of the Asian Development Bank and about half of the World Bank.

In his meeting with Jin, the minister outlined Iran’s plans to develop infrastructures in aviation, rail travel, roads and maritime industries and called for benefitting from the financial and credit resources of the Beijing-based bank.

“Iran has drawn up schemes in the aforementioned sectors and wants to implement them with the help of financial and lending institutions,” Akhoundi was quoted as saying by the state news agency.

According to the minister, BOT (build–operate–transfer) and BLT (build–lease–transfer) methods of finance are the preferred choices in financing the mega projects. In the former method a private company builds and operates a facility and when it is finished, transfers the ownership to the government. In the latter, the government leases the project for operation for a set period of time and at the end of the period and after the lease amount has been settled, the project’s rights are transferred to the government.

Along with 26 other initial founding member states, Iran signed the constitution for the bank on June 29 in Beijing and currently holds 15,808 shares, or 1.61% of all the shares, granting the country 1.63% of the bank’s total votes.

  AIIB’s Plans

Akhoundi and his entourage were keen to learn more about the activities and goals of the development lending institution which specializes in infrastructure projects.

“Iran is a founding member of the bank and that carries much weight with the AIIB,” said Jin.

He noted that after prioritized infrastructure projects in Iran are introduced and outlined to the bank, it will take action to finance them. The senior Chinese banker pointed to the possibility of bettering living conditions in distressed urban and suburban areas in Iran by way of improving the residential units – a proposition welcomed by the minister.

Iranian lawmakers approved the proposal of Iran’s membership in the AIIB in late August and President Hassan Rouhani enacted the law in early October. It is reported that strengthening relations with Asian powers through infrastructure development is Iran’s main goal for joining the bank. Akhoundi requested the Chinese executive to send a delegation from his bank to Tehran to witness the development projects at close range and discuss details of possible collaboration.