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 State-run China National Transportation Equipment & Engineering Co
Ltd (CTC) is close to finalizing an agreement on the $3 billion rail
project to connect Tehran with the northeastern holy city of Mashhad,
a Chinese source told Reuters.
Dalian Shipbuilding Industry Co, which is also controlled by
Beijing, has likewise been in discussions on building container
ships and oil tankers for Iran, according to two sources who
declined to be identified because the talks are still continuing.
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 (580 mile) rail project, China's Export and Import
Bank (EXIM) is expected to fund 85 percent of the cost, with CTC
providing engineering, procurement and construction services, said
the source.
China EXIM Bank is Beijing's designated policy lender for large
trade deals and overseas investments by Chinese firms.
Neither the bank nor CTC responded immediately to requests for
comment.
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
A spokesman at China Shipbuilding Industry Corp, parent of Dalian
Shipbuilding, did not immediately respond to a request for comment.
However, one of the sources estimated Iran would 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 (IRISL) - Iran's top container and cargo carrier -
and the country's oil shipping operator National Iranian Tanker Co (NITC),
the sources said.
IRISL and NITC were not immediately available for comment.
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"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 in an order worth $1.2 billion between 2012 and
2013, Reuters has reported.
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.
Major international companies are also rushing to establish a
position in Iran as the Islamic Republic re-opens for business.
With 80 million people and annual output of about $400 billion, Iran
is the biggest economy to rejoin the global trading system since
Russia did so following the breakup of the Soviet Union over two
decades ago.
(Reporting by Chen Aizhu in BEIJING and Bozogmehr Sharafedin in
DUBAI; additional reporting by Engen Tham in Shanghai; Editing by
David Stamp)
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