Tehran to Invest $19.5m on Upgrading Public Bus Fleet

EghtesadOnline: Tehran Municipality plans to spend 5 trillion rials ($19.53 million) on new buses to bolster the aging public transportation fleet in the capital.

News ID: ۷۸۵۷۵۶

10 January 2021

Mahmoud Tarfa, the head of Tehran Bus Company, said Tehran Municipality has issued participatory bonds worth 15 trillion rials ($58.59 million), one-third of which or $19.53 million is to be used for upgrading the bus fleet and the remaining will be invested on subway development.

“Besides the bonds, the municipality will also open up its coffers to expedite the bus fleet renewal,” the official was quoted as saying by ISNA.

Tarfa added that a single-cabin bus costs around 40 billion rials ($156,000).

In June 2020, major domestic automaker Iran Khodro Company (IKCO) started collaboration with TM with a contract worth 4 trillion rials ($15.62 million) to deliver minibuses and LPG- and CNG-hybrid buses.

“A contract between IKCO and TM has also restarted IKCO’s bus production lines after a long-drawn lull,” Mohammad Zali, the CEO of Iran Khodro Diesel, an IKCO subsidiary, said.

Zali noted that the production lines are running at lower capacity to deliver 620 buses and minibuses to the municipality.

“By early November, 40 LPG and diesel buses were inducted into the capital’s transport fleet. Domestic production of the vehicles cuts capital flight and creates jobs for 1,700 people,” he added.

The two sides have also signed a memorandum of understanding to produce 800 more buses by the end of the current Iranian year (March 20). The government and TM will line up finance for this initiative.

With only a quarter remaining to the deadline, it is doubtful that the agreed number of buses will be delivered on time.

Speaking to reporters, Tehran Mayor Pirouz Hanachi said Tehran faces huge shortfalls in its public transportation system and the new vehicles will partially fill the gap. He hoped collaborations between TM and the state automaker will expand.

SAIPA Joining the Move

The second domestic automaker SAIPA has made a deal with the national union of urban bus transportation for delivering 1,000 vehicles.

During the signing ceremony on Thursday, CEO of SAIPA Javad Soleimani said the company can produce up to 3,000 buses per year and guaranteed the timely delivery of high-quality vehicles.

“The company is committed to fulfilling the contract by March 20,” he added.

Also present at the event, Mehdi Jamalinejad, a deputy interior minister, said around 70% of the country’s urban bus fleet are overaged.

“With SAIPA’s cooperation, the transport fleet will slightly freshen up,” he added.

Following the government’s decision to raise fuel prices on Nov. 15, 2019, the use of public means of transportation has surged. With the troubles caused by the outbreak of the Covid-19 pandemic, restoration and renewal of the bus fleet have been placed high on the state’s agenda.

Renewal Plans

Besides boosting local production, officials have resorted to repairing dilapidated bus fleet as a cost-effective choice to streamline the public transportation system in the Iranian capital.

In early November 2020, Tehran Bus Company and the Industries Ministry reached an agreement to restore 1,000 dilapidated urban buses under a long-term scheme.

Tarfa said the plan, which initially targets 100 privately-owned buses in the capital, will be implemented as soon as the financial details are determined.

Stressing that only 40 buses were overhauled in the last Iranian year (ended March 19, 2020), the official noted that to compensate for the slow pace of restoration plans and the sluggish addition of new vehicles to the transportation fleet, TBC is making a complementary effort.

Tarfa said whenever funds become available, the company repairs and reuses old buses that have been phased out of the fleet in recent years.

“The Interior Ministry has emphasized that the number of buses operating in the metropolis should not decrease. Considering the city’s dense population, it would cause serious disruption to the commutation of a large number of citizens,” he said.

Similarly, the Plan and Budget Organization has started a joint move with mayors of 68 cities and Omid Entrepreneurship Fund to overhaul 5,000 dilapidated urban buses nationwide.

Based on a deal signed in mid-November, the fund will pay cheap loans worth 2.24 billion rials ($8,750) to bus owners. The loans will be offered with a 4% interest rate and a repayment period of five years.

The remaining expenses are to be covered by municipalities and owners. Further details will be announced by the authorities later.

“Of the total number of buses covered by the scheme, 1,700 will be revamped in the capital city of Tehran and Isfahan, 1,600 in Karaj, Ahvaz and Kermanshah, and the rest in other cities,” Hamid Pour-Mohammadi, a PBO deputy, said.

The restoration scheme is expected to improve public transportation services in metropolises, increase the sector’s employment rate and improve ventilation systems that benefit passengers, especially during the Covid-19 outbreak, help curb the suffocating air pollution, increase the efficiency of fuel consumption and boost transportation safety.