Persian-language Sharq, a leading reformist newspaper, had published an exclusive report on Tuesday saying that Economy Minister Ali Tayyebnia would travel to Seoul within the next month in order to formally attend an event to complete the procedure, citing an unnamed "credible source".
In a talk with Fars News Agency on Friday, Tayyebnia confirmed that the credit line is aimed at financing Iranian projects and "we have been negotiating regarding the quality of a trade agreement and the details of guarantees".
Noting that "fortunately th e positive results would be achieved gradually", he added that the credit line is in no way related to Iran's oil income and will be provided in its entirety by South Korea, Financial Tribune reported.
Almost all the key details of the credit line have been reportedly agreed upon, and the Korean government has given the green light, based on which $8 billion will be provided by Export–Import Bank of Korea (KEXIM) while the Korea Trade Insurance Corporation (K-SURE) will account for the rest.
According to Sharq's source, $1.7 billion of the Korean finance will be allocated to the Isfahan refinery with another $3 billion going to the construction of eight gas condensates refineries in Siraf, Asaluyeh region.
Hyundai Motor Company, Daelim and Chiyoda Corporation "are meant to build these eight refineries as a consortium" in which Hyundai holds a 34% stake with the other two companies each holding a 33%. Eight Iranian consortiums which had started work on the projects before will remain the employers.
Executives with the Siraf Refineries Complex, which is owned by Iranian consortiums and who are overseeing the construction of the refineries, are reportedly in the final stages of negotiations with the Korean lenders and construction is set to begin from September 23 while the first payments will be made by late summer.
Unspecified amounts have also been reportedly earmarked for ethane extraction in phase 12 of South Pars Gas Field and building "an equipped hospital", the location and capacity of which is unknown as of yet .
FDI Turnaround
If the Korean funds do in fact find their way to Iran as predicated, it would mark a significant milestone for the administration of President Hassan Rouhani who has come under fire by his opponents, who assert that the nuclear deal has failed to yield any economic rewards for the country.
The deal could also help alter the extremely cautious stance taken by major regional and European banks who have so far refrained from engaging Iran for fear of US penalties and potentially high risk of investment.
According to the World Investment Report 2017 released by the United Nations Conference on Trade and Development (UNCTAD), Iran received a total of $3.372 billion in foreign direct investment in 2016. The country's inward FDI in 2015 stood at $2.050.
Referring to the report, the director of the Organization for Investment, Economic and Technical Assistance of Iran, affiliated with the economy ministry said in a recent talk that last year, an "unprecedented volume of requests for investment in Iran were registered" and the organization, in tandem with other related entities, managed to finalize many of their negotiations in this regard.
"We approved more than $10.4 billion in investments [in 2016-17] and issued guarantees for them unprecedented in the history of the organization," Mohammad Khazaei added.
In his remarks, Tayyebnia also said that the finance contract with South Korea will not in any way be affected by the decision that is to be made by the Financial Action Task Force in the coming days, which is to pass judgment on whether or not Iran will be taken off of its blacklist of countries that do not adequately adhere to its standards of fighting money laundering and combating financing of terrorism.
The economy minister also referred to the finance deal with China, saying "there have been problems regarding guarantees and international licenses which will be resolved by way of negotiations".