Share of Rail in Iran's Cargo Transport Rises

EghtesadOnline: Despite tight budget and little investment, President Hassan Rouhani’s administration has been able to increase the share of rail in cargo transportation in Iran, setting the stage for realizing the ambitious targets set in the sixth five-year development plan (2017-22).

News ID: ۷۳۹۸۸۷

18 February 2017

According to Chairman of the Islamic Republic of Iran Railways Saeed Mohammadzadeh, 12% of cargo transportation in Iran are carried out via rial. The share stood at 8.5% the year Hassan Rouhani took office (2013).

“By the end of the sixth plan, the share of railroads in cargo transport is stipulated to reach 30%,” Mohammadzadeh, also a deputy minister of roads and urban development, was quoted as saying by IRNA.

Iran's development plans outline government strategies in its budget planning for the next five years. The approval of the sixth plan, which is currently being finalized in the parliament, has been delayed as it was supposed to be implemented as of the beginning of the current Iranian year (started March 20, 2016), according to Financial Tribune.

The plan also tasks the government with increasing the share of rail in passenger transportation to at least 20% by 2021.

Taking advantage of its strategic geopolitical position in the region, Iran seeks to become a hub of transportation, thereby boosting transport revenues and reducing reliance on oil that currently accounts for the lion’s share of the national income.

The government is also trying to transfer as many passengers and as much freight as possible from roads to rail to facilitate transportation, save hydrocarbon fuels and reduce air pollution.

Plans are underway to build 9,134 kilometers of railroads across the country. Track-laying of more than 3,500 kilometers of railroads is currently underway, with 540 kilometers in the final stages, according to officials with the Ministry of Roads and Urban Development.

As per the sixth plan, it has been decided that 1% of annual oil revenues be allotted to development of railroads over the next five years. The government has also earmarked $500 million for the rail sector in the budget for the next Iranian year (March 2017-18).

Development projects include double-tracking, electrification and construction of high-speed railroads and track-laying on 1,500 km of new lines.

Major railroad projects in need of financing include Qazvin-Rasht (388 km), Tehran-Isfahan high-speed line (410 km), Mianeh-Tabriz (200 km), Tehran-Hamedan-Sanandaj (430 km), Shiraz-Bushehr (250 km), Gorgan-Bojnourd-Mashhad (570 km), Mianeh-Ardabil (175 km), the so-called Gharb (West) Rail project as well as electrification of Garmsar-Incheh Borun and Tehran-Mashhad lines.

Director general of IRIR’s International Affairs Office, Abbas Nazari, said the government has reserved $10 billion worth of rail projects for foreign investment following the implementation of the nuclear deal.

"Iran has been in talks with Italy, Russia, China, India, France, Turkey and Germany to attract the needed foreign capital," he said.

Italy has reportedly agreed to invest an aggregate of $4 billion, Russia will provide €1.2 billion for the Garmsar-Incheh Borun route and India is supplying rails worth $175 million for a route from southern port and special economic zone of Chabahar to the city of Zahedan, both in Sistan-Baluchestan Province.

Germany has signed several agreements to invest in the manufacture of equipment in Iran. Early October, Siemens signed a contract to supply components for 50 diesel-electric locomotives to Iran.

Under the contract, signed with Iranian power and infrastructure group MAPNA during an official visit of German Economy Minister Sigmar Gabriel to Iran, Siemens agreed to deliver the components, which will be assembled in Karaj, Iran's fourth-largest city.