The China export & credit insurance corporation, Sinosure, is guaranteeing a US$1.5bn loan that will be provided by Iran's bank of industry and mine to finance the electrification of a 926km railroad from Tehran to the eastern city of Mashhad in Khorasan Razavi Province.
The electrification project, carried out by China national machinery import and export corporation, is estimated to take four years and when completed will raise the speed of the line from the current 160 kph to 200 kph, significantly reducing the duration of a trip between the two cities.
For Iran, the electrification of Tehran-Mashhad line is part of its wider rail development plan to electrify all railroads by 2025, reported Financial Tribune.
Mr Asghar Fakhrieh-Kashan, Iran’s deputy minister of roads and urban development, said the project was worth EUR2.2bn (US$2.56 bn) and two-thirds of the cost would be financed by the Chinese government at a very low interest rate. He added that the remaining one-third would be covered by Sinosure.
Sinosure, the state-owned Chinese credit insurer is involved in other projects in Iran. In January this year it opened a line of credit of up to $1.3bn to finance the development of Abadan Oil Refinery, Iran's oldest refinery in the southern Khuzestan Province.
In May 2017, Sinosure signed a MoU under which it will insure state-owned and private Chinese companies that intend to invest in Iranian projects.
Sinosure also covers political, commercial and credit risks with their services including short-, medium- and long-term export credit insurance, investment insurance, bond and guarantee insurance, debt and capital retrieval business and credit assessment.