JBIC EXTENDS EXPORT CREDIT TO BANK MELLI IRAN --To Help Modernize Iranian Railways--
1. Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Yasuda) signed today an agreement for an export credit in the form of a direct credit facility totaling 513 milllion yen with Bank Melli Iran, a state-owned institution, to finance exports of railway equipment by Japanese firms to Iran. This bank-to-bank credit is cofinanced with the Bank of Tokyo-Mitsubishi and JBIC assumes 308 million yen or a 60 percent share of the total amount. This agreement extends export credit for the supply of line equipment to the Iranian Islamic Republic Railways. It is one of four projects for which the basic terms and conditions were agreed on with Iran to provide financial support for exports of equipment and services, under a protocol signed on November 2,2000, for the first time in 25 years. Financing agreements earlier were signed for the 4th Aromatics Plant Project and a PTA II (Purified Terephthalic Acid) Plant Project on March 16,2001, and negotiations are underway for the remaining Ardakan Pellet Plant Project.
2. The project constitutes part of the overall modernization program of the country's 1,066-kilometer southern rail route that connects Teheran, the capital, with two cities, Bandar Imam and Khoramshahr, on the Persian Gulf. The purpose of this project is to supply line equipment and a 66 station multiplex and supervisory system.
3. The Iranian Revolution in 1979 and the subsequent Iran-Iraq War from 1980 to 1988 brought export deals to a standstill. In particular, Japanese export credit for Iran in the form of direct credit has not been provided since 1976 when a buyer's credit was extended to the National Petrochemical Company (NPC) for exports to the Iran-Japan Petrochemical Company (IJPC). However, changes in the political and diplomatic environment that have taken place since the moderate reformer President Khatami took office in 1997 have reinvigorated Japanese business activity looking toward exports to Iran.
4. The facility will provide financial support for increased exports of equipment and facilities by Japanese firms, thereby bringing about closer trade ties between the two countries and contributing to Iran's economic development through helping implement its high priority projects. Bank-to-bank credit is an export financing arrangement in which a credit facility is extended to the importer by way of a financial institution in the country where the importer resides and this form of credit was extended to all four projects.
5. This financing is undertaken as part of the Comprehensive Cooperation Package to Address the International Digital Divide, announced by the Japanese government before the Kyushu-Okinawa Summit.