Germany’s KfW to provide €1.2b rail loan to Iran

FRANKFURT: Germany agreed to provide Iran with a €1.2 billion (RM5.66 billion) credit line to help finance a rail project, according to an official at the Central Bank of Iran.

The facility — through state-run lender KfW IPEX — would help fund the development of the Tehran to Mashhad railway, said the official.

German banks had also agreed to help fund power stations in the country, he said.

Iran has struggled to raise foreign financing for tens of billions of dollars worth of infrastructure projects it hoped it could get started after sanctions were eased 10 months ago.

Large European banks had mostly kept their distance, worried that they could fall afoul of remaining United States sanctions, said Iranian officials.

KfW IPEX, in an emailed statement, said it could “neither confirm any loan, credit line or similar transaction within Iran nor are we — due to banking secrecy — in position to comment on potential business or transactions under negotiation”.

The funding had been agreed in principle and was close to being finalised, said Michael Tockuss, chairman of the Germany-Iran Chamber of Commerce, in an interview in London, adding it would be the biggest credit line Iran had secured from foreign sources since the easing of sanctions in January.

“The idea is to choose projects that change the day-to-day reality for the average Iranian citizen to make them feel that it makes sense to make international agreements,” said Tockuss.

“It’s a frustration from our ministry of economy that the bigger banks aren’t stepping in.”