Tayyebnia in Seoul to Finalize $13b Credit Line

Economy Minister Ali Tayyebnia met his South Korean counterpart to finalize a $13 billion credit line which is to be allocated by two Korean financial institutions to support Iranian projects.

The minister on Friday travelled to Jeju, an island off the coast of the Korean Peninsula to take part in the second annual meeting of the board of governors of the Asian Infrastructure Investment Bank (AIIB) and held talks with Yoo Il-ho about the credit, reports IRNA.

The credit line, which is in the final stages of negotiations, has backing from  the Seoul government. The Export–Import Bank of Korea (the country’s Exim Bank) will provide $8 billion while the Korea Trade Insurance Corporation (K-SURE) will provide the rest.

As Tayyebnia had confirmed on Friday, the credit line is aimed at financing Iranian projects while negotiations have been underway “regarding the quality of trade agreements and relevant guarantees”.

The two officials also reportedly conferred about establishing corresponding banking relations and opening branches of Iranian banks in the Asian country.  

In late May, the CEO of Bank Mellat said his bank had obtained the license to reopen its branch in Seoul and is the only active Iranian bank in South Korea allowed to open accounts in won.

On the other hand, Woori Bank inaugurated its representative office in Tehran in May 2016, marking the first presence of a South Korean lender in Iran since 1962 when the two countries established diplomatic ties.

Facilitating the conversion of currency from oil sales and transport was reportedly among other subjects discussed between Tayyebnia and Yoo. However, as the Iranian minister has confirmed before, the credit line is in no way related to Iran’s oil receipts and will be paid in its entirety by South Korea.

According to the Persian-language newspaper Sharq, $1.7 billion of the Korean finance will be spent on the construction of the Isfahan refinery while another $3 billion will be allocated to building eight gas condensate refineries in Siraf, Asaluyeh region.

Hyundai Motor Company, Daelim and Chiyoda Corporation will reportedly build the refineries as a consortium in which Hyundai holds a 34% share, the other two companies each hold 33%, and eight Iranian consortiums that had started work on the projects earlier will remain as employers.

 Meeting With Indian Minister

As part of the AIIB meeting, Tayyebnia also met with Arun Jaitley, his Indian counterpart to discuss facilitation of lines of credit between the two countries.

According to the official news service of the ministry of economy, based on the agreement between Tayyebnia and the Indian official who also presides over that country’s ministries of defense and corporate affairs, “it was confirmed that the credit lines be used for building railroads in Chabahar, Zahedan, Mashhad and Chabahar Port”.

In light of the fact that both countries are eager to pursue the development of Chabahar Port, it was agreed that with funding from India, the current problems of private companies working to develop the strategic port will be addressed.

Both ministers also agreed on continued transfer of hard currency between the countries. Tayyebnia invited his Indian counterpart to visit Iran.

AIIB is a new multilateral financial institution founded to bring countries together to address the daunting infrastructure needs across Asia. Headquartered in Beijing, AIIB’s mission is to improve economic and social development in Asia by investing in high quality, financially viable and environmentally friendly infrastructure projects.