An unnamed Chinese investor has expressed readiness to provide $1.3 billion in finance to build a petrochemical plant in Varzaghan County, East Azarbaijan Province, the deputy head of the province’s Investment Services Center announced.
“The foreign investor will provide a major part of the project, or $1.3 billion, while local investment would amount to 1 trillion rials [$23 million],” Reza Hosseini was also quoted as saying by IRNA on Sunday.
Currently, Tabriz Petrochemical Company is the only operational petrochemical plant in the province, while another complex in the city of Bonab is in the process of gaining the required permits.
According to Hosseini, the envisioned petrochemical complex is aimed at producing 520,000 tons of polypropylene per year and creating 1,500 jobs.
Polypropylene is a component mainly used in the automotive, textile and packaging industries.
The plant will require some 15 million cubic meters of water per year, 5 million cubic meters of gas per day as its feedstock and at least a 250-hectare plot.
Asadollah Asgaroladi, the chairman of Iran-China Chamber of Commerce, told NIPNA in December that China's financing terms for Iran's energy and petrochemical projects are suitable, stressing that these pave the way for China's stronger presence in Iranian projects.
"The Chinese [offer loans to] finance petrochemical development projects with an interest rate of 6-12% ... That's a suitable rate and on a par with international standards," he said.
Asgaroladi added that after the lifting of international economic restrictions in early 2016, the central banks of Iran and China took measures to boost financial and banking relations and ease Chinese investment in the country.
The official said Tehran and Beijing reached an agreement to jointly fund Iranian development projects backed by the two governments, with Chinese investors to provide 85% of funds and the rest to be sourced through the Central Bank of Iran.
Chinese companies have played an increasing role in Iran's quest to reform its energy and petrochemical sectors, revamp aging refining facilities and expand oil and gas transfer and export infrastructure. China's Petroleum and Chemical Corporation, also known as Sinopec, finalized a contract last year to expand Abadan Oil Refinery in southern Khuzestan Province.
Officials say China accounts for nearly 40% of Iran's petrochemical and 70% of polymer exports.
Tehran is making efforts to double annual petrochemical production capacity from around 60 million tons by opening up the sector to foreign investors. It has said over $70 billion in foreign investments are needed for 80 major petrochemical projects.
The petrochemical sector is Iran’s second-most valuable industry after oil and gas.
Add new comment
Read our comment policy before posting your viewpoints