Iran-Russia Railroad Cooperation to Remain Unaffected by US Sanctions

EghtesadOnline: The US sanctions will not affect Iran’s railroad cooperation with Russia, which will continue to expand just as the previous round of sanctions failed to impact their railroad construction initiative, a deputy head of the Islamic Republic of Iran Railways said.

News ID: ۷۴۵۷۴۷

30 July 2018

Speaking to Russia’s Sputnik news agency, Hossein Ashouri added that contractors and specialists from both counties are taking part in joint projects.

“Since the commissioning is carried out by Russian specialists, equipment is also provided by the Russian side in accordance with their agreements,” he said.

“Both Iranian and foreign specialists are involved in the projects carried out with foreign companies. In accordance with the arrangements made for the project, Russia is responsible for project finance. However, both Iranian and Russian contractors and specialists participate in the project. In some places, the ratio of Iranian and Russian specialists is 50—50, and in some it’s 30—70.” The projects use both the domestic and foreign potentials of the companies involved, according to Financial Tribune.

According to Iran’s Minister of Roads and Urban Development Abbas Akhoundi, last December, Iran and Russia signed a contract for the production of railcars.

Earlier, the Iranian media reported that the United Wagon Company and three Iranian companies had agreed to supply the railcars. It was planned that the Iranian companies would produce the cars’ bodies and UWC would supply the wheels and braking systems.

The Russian side is also responsible for the provision of equipment and spare parts.

Ashouri noted that there’s no difference between Russian or any other foreign equipment, since all the companies are upholding international standards.

“As Russia is responsible for the financial aspect of the project, the equipment must also be supplied by this party. We don’t seek any advantages of Russian equipment over foreign equipment. If we had signed a contract with another country, we would’ve bought the equipment there,” he said.

“The contract states that Russian factories will manufacture some of the railcars and spare parts, and three Iranian car manufacturing companies will do that in Iran. IRIR is not the buyer; it’s the Iranian private companies. IRIR is the guarantor of payment.”

Russian Spare Parts Needed

The major project to electrify the 430-kilometer-long railroad connecting the city of Garmsar in Iran’s Semnan Province with the city of Incheh Borun to its northeast in Golestan Province started on July 2.

The electrification project will take around four years to complete.

As for the agreement on the electrification of the Garmsar-Inche Borun rail route, Iran will also need Russian spare parts.

A contract worth €1.2 billion was signed between Iran and Russia for this project in 2015.

“We’ll need various spare parts after the district’s electrification to maintain the railroads, since Iran lacks the resources to do that.”

As part of the agreement on the electrification of Garmsar-Inche Borun, the two countries also agreed on the implementation of several more joint projects, such as the launch of the Khaf-Kashmar double-track railroad, as well as the electrification of Sarakhs-Bandar Abbas Railroad. At present, the parties are expected to hold negotiations to sign the contracts.

Ashouri stressed that railroad cooperation between Russia and Iran would develop, despite the sanctions.

“In recent years, Russia has been under international sanctions. However, even during the sanctions period, Iran had no problems with railroad cooperation with Russia. Now when some new restrictions have been introduced, I’m sure they won’t affect our cooperation.”

Significance of INSTC for Trade Ties

The IRIR deputy head also stressed the importance of the International North–South Transport Corridor in the two countries’ trade relations. Preliminary studies show that the corridor’s capacity is over 7,000 tons of goods per year, which can increase further.

“Over the past 14-15 years, there has been much talk on the International North-South Transport Corridor. One of the problems with the corridor’s launch is that there’s no railroad service for the Qazvin-Rasht-Astara route. For several years, we’ve been trying to establish service along Qazvin-Rasht and Astara-Astara [Iran-Azerbaijan],” he said.

“Last year, we finished the construction of Astara-Astara Railroad and this year we’re going to launch the Qazvin-Rasht. We have to complete the Rasht-Astara section, which is 167 km long, and which is financed by Azerbaijan. It will be launched in three to four years.”

According to Ashouri, there was a trial cargo shipment from India to Qazvin (rail), Qazvin to Astara (by truck) and Astara to Moscow (rail).

Currently, the shipment costs are being negotiated. The three sides have also agreed to reduce duties to increase the attractiveness of cargo transportation along this route.

Ashouri noted that the railroads are meant primarily for freight traffic, but there is also the possibility of passenger transportation.

“During the Soviet era, there were trains going from Tehran to Moscow through Jolfa. After the collapse of the Soviet Union, the railroad service ceased. However, there’s a possibility of once again launching the Tehran-Moscow train. But, in general, we’re talking about the countries’ cooperation in the field of cargo transportation.”