TEHRAN – The Islamic Republic of Iran Railways (RAI) has allocated 20 trillion rials (over $40 million) in preferential loans to support private-sector investment in renewing the country’s rail fleet, a senior official at the company said.

Nourollah Beyranvand, deputy for capital provision and transport economics at RAI, said the funding was approved by the National Employment Task Force and has entered the implementation phase, according to Tasnim news agency.

The loans, provided as managed funds, are aimed at modernizing freight locomotives, passenger wagons and specialized rail equipment to improve efficiency, service quality and network sustainability, he said.

Under the scheme, banks will finance 80 percent of each project, with investors providing the remaining 20 percent.

The loans carry a preferential interest rate of about 15 percent, a two-year grace period and a three-year repayment term, Beyranvand said.

He said projects submitted to the agent bank amount to around 1.5 times the approved funding ceiling, with 18 private companies introduced to a domestic bank to access the facilities.

Firms that secure bank approval and required guarantees more quickly will be prioritized, he added, noting that the railway company will assist with guarantees within regulations.

Beyranvand said an agency agreement has been signed with the bank and that technical and economic feasibility studies have been reviewed and forwarded.

He said the projects will refurbish or supply 65 passenger wagons and 19 freight locomotives, creating about 1,500 direct and indirect jobs across the rail value chain.

The upgraded fleet is expected to save more than $6.0 million annually in fuel consumption.

EF/MA