The Money Puzzle Behind Zakani's Buses

Tehran Municipality is pursuing the purchase of new buses. Amid reports about financing urban projects, the name Dat-Van has also come up, and two city council members report denying a meeting between Zakani and Babak Zanjani.

Housing and Urban Development, Behshad Bahrami: Tehran needs more buses and Alireza Zakani has promised to compensate for an important part of the lack of the capital's fleet. The purchase of domestic buses, bus import contracts and the development of the electric fleet have been among the most important plans of the municipality in the past months. programs whose implementation requires significant financial resources; That too, in a situation where inflation has greatly increased the cost of purchasing equipment and implementing urban projects. However, the municipality is still talking about new contracts and fleet development plans. Where does the money for these projects come from?

The answer may lie beyond the usual sources of municipal funding. In recent months, there have been rumors about the role of some economic groups in financing urban management projects. One of the names heard in these narratives is the Datwan group owned by Babak Zanjani; A group that has invested in the field of transportation and now its name is mentioned next to the discussion of providing financial resources for municipal projects.

These hearsays do not yet provide a picture of a specific contract, but they raise an important question: Has the municipality turned to agreements with economic groups to advance its costly programs? And if so, what does the other party receive in return for providing resources?

Buses that are going to reach Tehran

Renewing the bus fleet has been one of the main axes of the municipality's plans since the beginning of Zakani's administration. The mayor of Tehran has repeatedly spoken about the increase in the number of active buses and contracts for the purchase of new fleets and emphasized that an important part of the backlog of public transportation must be compensated through the purchase of domestic and foreign buses.

But the purchase of buses in recent years is no longer just a cash transaction between the municipality and the manufacturer. Zakani explained earlier about the way of financing the contract of domestic buses that 50% of the cost will be financed from the bank facilities, 25% in cash and the other 25% will be financed by handing over the property. In the contract for the purchase of foreign buses, the payment of part of the cost in cash and the remaining settlement in multi-year installments were foreseen.

This method of payment reveals part of the financial logic of new municipal projects. The city administration does not necessarily pay all the money at the time of signing the contract to buy the equipment it needs; A part of the cost is settled from municipal assets or future obligations.

Such a method allows the municipality to conclude contracts larger than its available cash resources. In contrast, a portion of the city's future assets or revenues are allocated to repay the cost of today's projects. The question is whether this model is also followed in cooperation with economic groups.

Datwan's name in municipal financial equations

Among the groups whose names have been mentioned in the hearings related to the financing of urban projects, Datone Group has a different position. This group belongs to Babak Zanjani; A figure whose name has appeared in major economic cases for many years has returned to the field of economic activity once again with investment plans in the field of transportation.

In recent months, Datwan has announced plans to expand into the transportation sector, including electric taxis and related investments. The presence of this complex in the field of transportation, along with the rumors related to the financing of urban projects, draws attention to the possibility of its cooperation with the urban administration of Tehran.

Of course, what is mentioned in these hearings is the possibility of Datone playing a role in providing resources for some municipal programs, and it cannot be attributed to a specific bus purchase contract yet. However, if such cooperation is going on, the importance of the story is not only in the entry of a new investor into urban projects; Rather, it is in the form of agreements and concessions that may be defined in return for financial resources.

Following the publication of news about the possible meeting between Zakani and Babak Zanjani, Ambassador Arjan followed up the matter with two members of the Tehran City Council. Both members of the council say that the mayor of Tehran has denied the news of the meeting with Zanjani, but in their statements, the possibility of the group's economic participation in urban projects is not ruled out.

Mehdi Akharian, a member of the Tehran City Council, explained in a conversation with Ambassador Arjan that he asked the mayor about the published news about the meeting between Zakani and Zanjani in a meeting at the late Shibani's hall. According to him, Zakani answered frankly that he did not have such a meeting and the published news is not true. Akhararian also said that the video of this meeting is available.

However, Iqrarian also narrates another part of the same meeting. According to him, Zakani announced in the presence of the deputy director of transportation and traffic of the municipality that if Babak Zanjani, like other economic groups, wants to invest in Tehran and help solve the city's problems, the municipality will welcome it. Referring to the activity of Datwan taxis, Ekhararian believes that the media space should not prevent the use of the capacities of the private sector for investment.

Nasser Amani, another member of the Tehran City Council, also emphasized in a conversation with Ambassador Arjan that Zakani has officially denied meeting with Babak Zanjani. Amani said about the possibility of Zanjani's economic cooperation with the municipality: "If he has a plan for Tehran that is beneficial to the municipality, he can participate in the municipality's projects like the others, and if he meets the criteria of his competence, it will be handed over to him."

Therefore, what the two council members are reporting is the denial of the meeting between Zakani and Zanjani; An issue that should be separated from the possibility of economic cooperation between the municipality and private collections. Conditional acceptance of investment does not automatically mean the existence of an agreement or contract.

For the municipality, the participation of economic groups can be a way to advance projects faster. For the investor, cooperation with the city management, depending on the type of contract, may provide the opportunity to exploit the assets, return the investment in the long term or enter new economic activities.

But in Tehran, there is another tool that can have significant economic value in such agreements: land and building density.

Today's money against tomorrow's density?

Pirouz Hanachi, the former mayor of Tehran, in his recent interview with Insaf News, has criticized the increasing dependence of urban management on income from construction and congestion. In other statements, he also warned about using building density capacity to finance some municipal programs.

The importance of these statements is that the municipality is not limited to cash, bank facilities or real estate sales to finance projects. The permitted increase in the level of construction in a land can also create economic value for the owner or investor. In this way, the construction capacity of the city becomes a tool for providing financial resources.

Suppose an economic group provides part of the cost of an urban project and, in return, obtains the possibility of building more infrastructure in a certain area. In this case, the resources needed by the project are provided today, but the cost of this agreement may appear in the future in the form of increased population density, pressure on infrastructure or changes in land values ​​in that area.

Behind the scenes of big city contracts

The entry of private investors into urban projects is not a new phenomenon. Municipalities in many countries use joint ventures, long-term contracts or concession of exploitation rights to implement transport and infrastructure projects. In Tehran, there is a history of using real estate and economic capacities of the city to finance projects.

But the difference between a normal purchase contract and an agreement that settles with the transfer of property or economic rights of the city is significant. In the first contract, the purchase price is specified and paid from financial sources. In the second contract, the value of what the municipality hands over may depend on future developments in the land market, buildings or municipal revenues.

For this reason, even if new sources can increase the speed of bus fleet renewal, the way they are provided and reimbursed is still important. The bus that enters the streets of Tehran today may be paid for in the following years from the resources that belong to the future citizens of Tehran.

In addition to these programs, the municipality also pursues other plans such as zero inflation; A program that is supposed to keep the price of some basic goods stable for a certain period. The set of these measures shows that Zakani is still seeking to expand the range of urban management activities in difficult economic conditions.

This approach highlights the question of financial resources; Especially when the name of large economic groups such as Datwan comes up in hearings about municipal projects.

What is the share of investors from Tehran tomorrow?

For citizens who wait at bus stops every day, the increase in the number of buses is good news. The lack of public transport fleet is one of the old problems of the capital, and the arrival of new equipment can reduce part of the daily pressure on passengers.

But behind every big city contract, besides the number of buses and their delivery time, there is another financial equation. Who will pay for the purchase, how will the municipality settle its debt, and will an asset or concession be given in exchange for these resources?