Financial Trouble Scuttles Expansion of Tehran Subway

EghtesadOnline: The expansion of the Iranian capital city’s subway network is a challenging task for urban managers, who are struggling to secure financial resources to accomplish the same.

News ID: ۷۵۱۵۵۲

22 November 2020

According to Ali Emam, Tehran Metro Company’s CEO, 12 stations were planned to become operational by the end of the current fiscal year (March 2021), but lack of financial resources has impeded the plans, Fars News Agency reported.

He announced that 10 trillion rials ($38.46 million) worth of participatory bonds issued by the government for subway expansion were supposed to be cashed and sent to the company by a local agent bank.

“Unfortunately, the bonds expired on Nov. 20 and the bank refused to cash them until the due date,” he said.

Emam said 7 kilometers of Line 6 along its northwestern flank, covering seven stations, and one station in Line 3 are ready for launch.

In Line 7, he added, four new stations are ready to start operations.

The capital's subway stretches over 220 kilometers and comprises seven lines (1 to 7) with nearly 120 stations. Lines 3, 6 and 7 are yet to become fully operational.

Tehran Metro Company’s plans also envisage equipping the already operating as well as new stations with elevators, escalators, signage, ventilation system and lighting.

The head of Tehran subway said the completion of two transportation terminals at Shahrak-e Ekbatan and Kolahdouz stations in the western and eastern flanks of Line 4 respectively tops the current year’s agenda.

Referring to financial issues, he said the budget bill passed for 2020-21 earmarks 28 trillion rials ($107.69 million) for Tehran Metro’s expansion.

Emam noted that last year, Tehran Metro earned 10 trillion rials ($38.46 million) by selling participatory bonds via a local agent bank. Of this amount, the bank paid only a small portion to the company and 9.1 trillion rials ($35 million) have not been delivered yet.

Normally, Tehran Metro handles over 5 million travels a day. According to Tehran Municipality, the number of commuters will surge by 25% after the unfinished subway lines are up and running.

But this is definitely not sufficient for Tehran where, according to statistics, over 10 million people commute daily, many from the surrounding cities and towns.

Metro Budget Deficit

Earlier in September, Mohammad Alikhani, the head of Tehran City Council’s Transportation Commission, said the subway’s network in the capital needs 2 quadrillion rials ($7.69 billion) for the construction of unfinished lines, purchase of train cars and standardization of equipment.

He added that due to the negative effects of US sanctions since the summer of 2018, Iran’s rial is losing value against hard currencies, making it a tough task to expand and renew the ailing public transportation in Tehran.

Since the US reimposed sanctions against Iran in 2018, the rial has lost 70% of its value against the greenback over the past year. On Saturday, the US dollar was trading at 260,000 rials in Tehran while it hardly fetched 42,000 rials in March 2018.

“A train wagon cost 50 billion rials a couple of years ago, but now the price reaches 200 billion rials, which Tehran Municipality cannot afford at present,” he added.

Mohsen Hashemi, the head of TCC, also expressed disquiet over Tehran subway’s shortfalls and said, “While the subway lines have been extended around the city by 80 kilometers in the past several years, not enough trains have been added to the metro’s network.”

Hashemi noted that for each kilometer of the subway, there was 1.1 train wagons.

“Today, the figure has fallen by 30%, which means that for each kilometer of operating subway line, there is 0.8 train cars,” he added.

Urbanists blame mismanagement and lack of budget for the slow progress of Tehran Metro’s expansion projects.

In early June, Alikhani had said the capital city’s subway system faces serious shortcomings that will not be obviated even in two decades, if policymaking processes and budget management are not overhauled.

“The subway network still lacks 3,000 train cars to facilitate 10 million daily travels … There are around 1,300 train wagons currently operating in Tehran’s subway, 30% of which need to be upgraded,” he said.

TM expects the number of commuters to surge by 25% after subway lines 6 and 7 are up and running.

But this is definitely not sufficient for Tehran where, according to pre-coronavirus statistics, over 10 million people commute daily, many from the surrounding cities and towns.