Economy, Domestic Economy

Chinese Firms Push for Multibillion-Dollar Iran Deals

Chinese Firms Push for Multibillion-Dollar Iran DealsChinese Firms Push for Multibillion-Dollar Iran Deals

Two Chinese firms are pushing for multibillion-dollar deals with Iran to build a high-speed railroad and modernize its shipping fleet following the lifting of sanctions against Tehran, Reuters reported citing “sources with knowledge of the negotiations”.

State-run China National Transportation Equipment & Engineering Co. Ltd. is close to finalizing an agreement on the $3 billion rail project to connect Tehran with the northeastern holy city of Mashhad.

Dalian Shipbuilding Industry Co, which is also controlled by Beijing, has likewise been in discussions on building container ships and oil tankers for Iran.

China, Iran’s largest trading partner and long-time ally, has agreed to boost bilateral trade by more than 10 times to $600 billion in the next decade. With Iran no longer subject to international sanctions since January following its nuclear deal with world powers, Beijing sees the country as part of its policy to increase trade and open new markets for its firms as the domestic Chinese economy slows.

For the 930-km rail project, China’s Export and Import Bank is expected to fund 85% of the cost, with CTC providing engineering, procurement and construction services.

China EXIM Bank is Beijing’s designated policy lender for large trade deals and overseas investments by Chinese firms.

Iran’s Tasnim News Agency last month reported a lower cost of $2 billion for the project, which it said would take 42 months to build.

 Tehran Visits

Iran is estimated to need $8-12 billion to modernize its fleet of container, cargo and oil tanker ships by around 2022.

Top Dalian shipyard executives have visited Tehran three times since January, meeting their counterparts at the Islamic Republic of Iran Shipping Lines—Iran’s top container and cargo carrier—and the country’s oil shipping operator National Iranian Tanker Company.

“We’ve had lots of contact with NITC,” said a Chinese shipbuilding executive, declining to be identified because he is not authorized to speak to the media. “Advanced ship models and solid technical support make Dalian Shipping a strong suitor for Iran.”

Previously Chinese shipyards, including Dalian, had built large oil tankers for NITC for an order worth $1.2 billion between 2012 and 2013.

“State financing and lower costs would make China a dominant player in the Iranian shipping industry versus Asian rivals South Korea and Singapore,” said Reza Mostafavi Tabatabaei, president of London-based ENEXD, a firm involved in oil and gas equipment business between the Middle East and China.

“They (IRISL) hope to become one of the biggest shipping lines in the world,” said Tabatabaei, adding that NITC wants to double its tanker capacity within the next six years by buying new ships and overhauling existing ones.

 Supply of Subway Cars

Iran is about to take delivery of the first batch of subway cars made by China’s biggest train manufacturer, Asia Times reported.

The CNR Changchun Railroad Vehicles, a subsidiary of the Railroad Rolling Stock, on Wednesday said the subway cars developed for Iran have officially rolled off the assembly line in Changchun, the capital of Jilin province, according to the China News Service.

The subway trains are headed for Mashhad, Iran’s second-biggest city. The order for 100 vehicles will include some carriages reserved for women only.

Some of the subway cars will be produced by Tehran Wagon Manufacturing, a joint venture between Iran and the CNR. The exterior of train cars will be decorated with the color turquoise to represent the turquoise that abounds in Mashhad.

Earlier, light rail trains developed by the CNR Changchun Railroad Vehicles have been running for six years already, providing very good service for the city’s public transport, said Mohammad Mehdi Baradan, deputy mayor of Mashhad.

CNR has produced 2,000 vehicles for Iran since 1995, including subway cars, light rail trains and passenger trains. In December 2015, the company, along with NORINCO International, signed a 9-billion-yuan contract with Tehran, involving 1,008 subway cars.