Iran Railways has a US$2.4 billion letter of credit (L/C) ready to be drawn upon for work on the high-speed rail line between Tehran and Isfahan, the deputy dead of Iran Railways has announced.

Noorollah Beyranvand said the L/C is being provided by the Export-Import Bank of China (Eximbank China) and would be opened in favour of China Railway Engineering Corporation (CREC), the company due to carry out construction work on the project.

Sanctions threat

The project would most likely not attract funding from many of the world's largest banks since other companies involved in the project include Khatam Al-Anbia Construction, which is owned by Iran's Revolutionary Guard.

In April the US added Iran's Revolutionary Guards to its blacklist of terrorist organisations and strengthened sanctions against the Islamic republic, underlining the recent increase in tensions between Tehran and Washington.

European involvement

Other companies involved in the project are Germany's Siemens and Italferr, the consulting arm of Italian national rail operator, Ferrovie dello Stato.

Iran signed a contract with CREC to build Iran's first high-speed railway line in 2015, and agreed financing with Eximbank China for the project in July 2017.

Construction underway

The 375 kilometre (km) line will carry trains at speeds of up to 350km per hour from Tehran to Imam Khomeini International Airport, Qom and Isfahan.

Construction is already underway and the line is due to begin commercial operations in 2021.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.