Iran says Japan has agreed to fund the development of some of its petrochemical projects – a groundbreaking move that could open the way for similar funding mechanisms for other sectors in the future.
Iran’s Ministry of Petroleum announced in a statement that a deal has been signed between the country’s Persian Gulf Petrochemical Industries Company (PGPIC) and Japan’s Marubeni to provide as much as €320 million for the development of PGPIC’s petrochemical projects, IRNA reported.
This, the Ministry added, will be carried out through a mechanism known as the Usance Letter of Credit (L/C).
The L/C permits the beneficiary to be paid immediately upon presentation of specified documents or at a future date as established in the sales contract.
IRNA added that another deal that envisages providing PGPIC with an extra €640 million is close to finalization and will be singed in the near future.
It also said that PGPIC plans to provide an extra $10 billion for its projects but did not specify where and how the sum is planned to be provided.
A top petrochemical official in Tehran said in June that discussions are underway with investors from Japan and South Korea to finance Iran’s petrochemical projects through the L/C mechanism.
Isa Mashayekhi, the managing director of Iran's Petrochemical Commercial Company International (PCCI), was quoted by the media as saying that his company is negotiating with some Japanese and Korean investors to attract an investment of €520 million for its projects.
Mashayekhi added that Iran's Ministry of Economy and Finance should provide state guarantees to access credit lines from other countries, Xinhua reported.
PCCI is a subsidiary of PGPIC which is in charge of talks with international companies for financing petrochemical projects and attracting investments for PGPIC projects, Xinhua added.