Transport Budget Up 5%

EghtesadOnline: The budget for Iran’s transport sector will increase 5% in the new Iranian year (March 2017-18) compared with the current year, owing mostly to an upsurge in the budget for the rail sector, a deputy minister of roads and urban development said.

News ID: ۷۴۰۲۴۶

08 March 2017

"The ministry's budget for the upcoming fiscal year stands at 81 trillion rials (more than $2.1 billion), of which 7.3 trillion rials ($193 million) have been allocated to housing and urban development, while 74 trillion rials ($1.96 billion) have been earmarked for transportation," Amir Amini was quoted as saying by Mehr News Agency.

“The budget for housing and urban development has decreased 36%. In the road sector, we are witnessing a 23% decrease. But in the rail sector, we have a 68% growth. Overall, there is 5% growth in the transport budget.”

Some 4,000 kilometers of railroads are under construction in Iran. Around 200 kilometers are ready to be launched while track-laying of 700-800 kilometers are in progress, according to the Islamic Republic of Iran Railways.

According to Financial Tribune, the 20-Year Vision Plan (2005-25) stipulates that the number of passengers using rail transport will increase from the current 25 million to 65 million per year. By the end of the sixth five-year development plan (March 2022), the share of railroads in cargo transport is also stipulated to reach 30%.

According to IRIR, 12% of cargo transportation in Iran are carried out via rail. The share stood at 8.5% the year President Hassan Rouhani took office (2013).

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)

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

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.

> Private Partnership

Amini said the Sixth Plan envisages an increase in private participation in transport projects.

“Contracts worth 120 trillion rials ($3.2 billion) have been signed with the private sector to develop freeways across the country,” he said.

“But to reach the objectives of the Sixth Plan, we need 500 trillion rials of investment ($13.2 billion), of which 350 trillion rials ($9.2 billion) are expected to be invested by the private sector and 150 trillion ($4 billion) by the public sector.”

The official said the government is planning to have the private sector fund 10% of its rail projects.

Figures published by the Central Bank of Iran show the budget earmarked for the development sector has never been fully allocated in the past few years.

The government was supposed to earmark $10 billion to development projects in the eight months of the current Iranian year (March 20-Nov. 20), whereas only 39% of this amount were injected.

This, in fact, has been the case during the past three years, as the government only met 58%, 68% and 39% of its development spending target during March 2015-16, March 2014-15 and March 2013-14 respectively.

The Iranian Parliament finalized the budget for the new Iranian year on Sunday, which amounts to 11.5 quadrillion rials ($305 billion).

The budget includes 3.98 quadrillion rials ($90.5 billion) earmarked as "general revenues" in addition to a whopping 8 quadrillion rials ($211 billion) to fund state companies, institutions and banks.

President Hassan Rouhani submitted the budget bill to parliament early December.