Iran Railways Fleet Expansion Plans by March 2019

EghtesadOnline: The Islamic Republic of Iran Railways plans to add 134 locomotives, 2,800 cargo wagons, 54 intercity passenger wagons and 46 railbuses to its fleet by the end of the current fiscal year (March 20, 2019), the deputy head of the organization said.

News ID: ۷۴۵۴۰۷

29 May 2018

“At present, there is capacity for 82 million tons of freight transportation, 15 million intercity and seven million suburban passenger transportation by rail in the country. The current plan will help further increase these capacities and facilitate transport,” Mojtaba Tafaqqodi was also quoted as saying by the news portal of the Ministry of Roads and Urban Development.

He added that IRIR aims to reduce the average age of passenger wagons, cargo wagons and locomotives to 20.33, 22.65 and 31.57 years respectively by the fiscal yearend.

According to the official, since the beginning of the plan in the fiscal 2015-16 to revive the country’s passenger fleet, some 615 decrepit passenger wagons have been scrapped, Financial Tribune reported.

“Plans are to discard 397 more by the [fiscal] yearend,” he was quoted as saying by IRNA.

According to CEO of Raja Railway Transport Company Mohammad Rajabi, the average age of Iran’s passenger wagons decreased by 22% to 28.5 years in the last fiscal (March 2017-18) from 36.9 years in the previous year.

Raja is affiliated to the Islamic Republic of Iran Railways and manages passenger trains.

Rajabi said the company disposed of around 200 decrepit wagons last year, adding that the number of passenger wagons in Iran presently stands at 1,100.

With the aim of reducing road traffic and battling air pollution, the Ministry of Roads and Urban Development has placed the development of Iran’s rail sector on top of its agenda.

Iran’s Sixth Five-Year Development Plan (2017-22) has tasked the government with increasing the share of rail in cargo and passenger transportation from the current 12% and 8% to a minimum of 30% and 20% respectively by the end of the plan.

To arrive at this goal, Iran’s Roads Minister Abbas Akhoundi said $28 billion worth of investment are needed.

Cheap fuel prices in Iran, costing less than 10% of the global average, are the main reason for the popularity of road over rail transportation in Iran.

Besides expanding Iran’s rail network and increasing connectivity both inside and outside the country, the ministry has moved to renew the country’s aging rail fleet.

Alstom to Manufacture 1,000 Subway Wagons in Iran

French company Alstom signed a trilateral “shareholders agreement” with the Industrial Development and Renovation Organization of Iran and Iranian Rail Industries Development Company in July last year to manufacture 1,000 subway wagons at IRICO’s facilities within three years.

An IDRO source told Financial Tribune that about €1.3 billion will be invested in the joint venture whose main shareholder is Alstom with 60%, while the Iranian sides each will own a 20% stake.

According to former minister of industries, mining and trade, Mohammad Reza Nematzadeh, the agreement pertains to “investment partnership, transfer of knowhow, manufacturing, exports and maximum use of Iran’s domestic capabilities”.

Hyundai Rotem to Produce 450 Suburban Wagons in Iran

Later in December, South Korean rolling stock manufacturer Hyundai Rotem signed a contract worth €720 million with IRIR to produce 450 suburban wagons in Iran. The South Korean side will finance the project.

Akhoundi, who was present at the signing ceremony, said when completed, the project will create jobs for 4,700 people in Iran and increase the capacity of Iran’s suburban transportation to 70 million passengers per year.

“The project entails technology transfer to Iran and will generate 1,000 direct and 1,700 indirect jobs in the process and some 2,000 jobs after it comes on stream,” he said.

According to the minister, it will take the South Korean side six and a half years to build the 450 wagons.

“A further 150 wagons are to be built for Iran as per a previous contract between Iran and Hyundai Rotem,” he said.

“By the end of the contract period, we will have 600 self-propelled suburban railbuses.”

According to Saeed Mohammadzadeh, the chief executive of IRIR, the first batch of the wagons will be delivered within the next one and a half years. He added that the owner of railbus wagons will be the Iranian government.

Joint Manufacture of  Rolling Stock With Russia

A few days later, Russia signed a €3 billion finance deal with Iran for the joint manufacture of 20,000 freight cars, 1,000 passenger cars, 350 locomotives and rail transportation equipment.

The financiers are Russian Export Center and Export Insurance Agency of Russia whose respective CEOs Petr Fradkov and Alexey Tyupanov signed the deal as the Russian side.

As per the agreement, 6,000 cars will be manufactured in the first phase of the agreement by Russia’s United Wagon Company in cooperation with three Iranian companies, the Arak-based Wagon Pars, Arak Steel and Wagon Kowsar, the contract for which was signed in February 2017.

According to Akhoundi, once the new wagons join the fleet, there will be a 70% and 50% rise in the number of these wagons respectively.

Iran has another agreement worth €2.5 billion with Russia’s CJSC Transmashholding for the joint production of rolling stock in Iran.

Based on this contract signed in late July 2017, a joint venture is to be formed between IDRO and the Russian company, with the Russian side holding an 80% stake and the Iranian side 20%.

Transmashholding CEO Kirill V. Lipa told Financial Tribune after the signing of the contract that the capacity of the joint venture will depend on the depth of localization.

“For assembling, we’re thinking about 300-400 units per year,” he said.

Locomotive, Freight Car Purchases From India

And more recently, Iran and India signed an agreement worth $2 billion early this year for cooperation in the rail sector.

A part of the agreement pertains to a memorandum of understanding worth $600 million for Iran to purchase locomotives and freight cars from India.

The agreement was signed in New Delhi on January 12 in the presence of Abbas Akhoundi and his Indian counterpart Nitin Gadkari.

The Iranian minister sayidIndia has expressed readiness to finance the purchases.

The MoU was signed between IRIR deputy for transportation planning and economics, Nourollah Beiranvand, and Rajeev Mehrotra, chairman and managing director of RITES Ltd Company.

“This project will come on stream within three years and a portion of the locomotives will be manufactured in Iran. We are willing and trying to turn the MoU into a contract,” Akhoundi said.

“Our cooperation with India means we will be provided with the latest global advancements in rail technology and industry.” Mehrotra said the new locomotives will be used on Chabahar-Zahedan Railroad to accelerate growth in Chabahar Port in line with India’s goal to connect to Central Asia and ultimately Europe through this Iranian port.

Cooperation With China

China Railway Rolling Stock Corporation Changchun Railway Company (CRRC CRC) and Tehran Wagon Company won the tender to build and supply 630 cars for Tehran’s Subway in March this year.

The project is worth more than €782.66 million and will be financed by the Chinese side, according to the director general of Urban Rail Transportation Bureau of Iran’s Urban and Rural Municipalities Organization affiliated to the Interior Ministry.

“We are negotiating to sign a contract. The Chinese company Norinco Group will function as the finance coordinator in this project,” Hossein Rajab Salahi told Financial Tribune.

“The Chinese side is to deliver 56 wagons in the form of completely built units. Another 70 wagons will be assembled in Iran {as complete knocked down] and the remaining 504 are going to be built in Iran. CRRC CRC will transfer the know-how for the construction of the bogie, engine and the aluminum body to the Iranian manufacturer among others,” he said.

“This will be a five-year project. The Economic Council has ratified a plan to add 1,050 rolling stocks to the capital’s subway system. This project will supply 630 wagons. We have plans to sign contracts for the remaining 420 within the next two to three months.”

Another contract was signed on the same day between the Industrial Development and Renovation Organization of Iran and CRRC Nanjing Puzhen Company, a Chinese railroad rolling stock manufacturer, for the design, procurement, supply, manufacture and delivery of 450 subway wagons for the Iranian cities of Ahvaz, Shiraz and Tabriz.

“The project is worth €500 million and will be financed by the Chinese side. The contract was signed by Naqi Manafi, IDRO’s manager for financial and economic affairs, and Wang Tao, general manager of Puzhen,” Ali Araqchi, the manager of IDRO’s International Affairs Department who negotiated the contract, said.

The official added that a local manufacturer will be selected to carry out the project.

“We are keeping our options open. We want to give all eligible Iranian wagon manufacturing companies an opportunity,” he said.

Stipulated in the contract, he explained, is that the Chinese company will transfer the relevant know-how, so there is a need to set up the production line and the infrastructure.

Araqchi said Puzhen has agreed to invest €25 million to realize this.

The project’s completion is estimated to take 55 months.