Agreements Reached to Invest $5.3 Billion in Afghan Infrastructure

EghtesadOnline: Preliminary agreements have been reached by Iran to invest $5.3 billion in Afghanistan’s road and rail transportation infrastructure as well as in the neighboring country’s housing sector, an advisor to Iran’s roads minister said.

News ID: ۷۸۶۴۵۴

17 May 2021

“We are now negotiating project details and selecting the companies that will be undertaking these projects,” Hossein Mirshafi was also quoted as saying by Mehr News Agency.

The official further said Iran has officially announced its readiness to cover the $2.2 billion investment required for the construction and completion of the Herat-Mazar-i-Sharif 656-kilometer-long railroad.

“Negotiations are underway for Iran to invest at least $3.1 billion on road construction, road transportation infrastructure and technical and engineering services in Afghanistan,” he added.

Mirshafi noted that the draft of a memorandum of understanding has been prepared by the two sides for Iran to invest in its eastern neighbor’s housing sector by constructing between 5,000 and 10,000 homes in the new cities of Afghanistan.

Once the agreement is finalized, these homes will be built in cooperation with Afghan companies using Iranian investments.

Khaf-Herat Project

Iran connected its eastern rail network to Afghanistan’s Khaf-Herat railroad project in December and negotiations were carried out with Kyrgyzstan, Uzbekistan, Russia and official of other regional railroads, which would hopefully result in positive changes and improvements in international rail transportation, the managing director of the Islamic Republic of Iran Railways said.

Saeed Rasouli also told a virtual meeting of the 36th conference of the Organization for Cooperation of Railways (April 19-23) that Iran intends to secure permits to operate freight trains across the Commonwealth of Independent States.

The railroad connecting Iran and Afghanistan was inaugurated by Iranian President Hassan Rouhani and his Afghan counterpart, Ashraf Ghani, via videoconference.

“Today marks an unforgettable day in [the two nations’] history,” Rouhani said after the opening ceremony.

The Afghan president, for his part, hailed the joint railroad as a “vital” and “historic” project.

“This project is a result of tireless efforts by both countries despite all restrictions,” he was quoted as saying by Afghan business news portal Wadsam.

Ghani, however, said the railroad was a critically important project, not only for Afghanistan and Iran but also for the region and beyond.

“The opening of Khaf-Herat railroad is a great step for the development and economic leap of Iran and Afghanistan,” Ghani was quoted as saying by Ariana News.

He said railroad transport is the most efficient, important and cheapest means of transporting goods in Asia.

Rouhani said Afghanistan will be connected to European countries through this railroad.

“With the Herat-Khaf railroad, Afghanistan will be connected to European countries and also to the Chabahar railroad,” he added.

Atta Nasib, the head of Afghanistan Investment Facilitation Unit, said that this will help turn Afghanistan into a transit hub.

“This railroad between Afghanistan and Iran is a major economic and strategic achievement for both countries, which will connect us to European countries,” he added.

The Afghan president called the railroad a "precious gift from Iran", which would help restore the Silk Road, an ancient trade route that spread prosperity across Asia.

The inauguration saw cargo trains depart from opposite ends of the line, AP reported.

According to Iran’s Minister of Roads and Urban Development Mohammad Eslami, the 225-km-long railroad has been designed in four sections, three of which were previously inaugurated on Dec. 10.

“Sections one and two are 78-kilometer-long from Khaf County to Shamtigh border crossing in Iran’s northeastern Khorasan Razavi Province and section three is 62 kilometers from the common border to Rozanak in Afghanistan. These three sections have been funded by Iran and constructed using Iranian expertise,” the official said.

Shamtigh border point was named an official border crossing between the two countries for the transportation of commodities and passengers, during the Cabinet meeting on Oct. 12.

Eslami noted that the 85-kilometer-long Section-4, which has yet to be constructed, continues to Herat, the neighboring country’s third largest city, and Afghanistan has committed to construct it.

“The rail route between Iran and Afghanistan has been laid with the aim of increasing transit. Unified tariffs will be set in this and other transit points in the country … Preliminary negotiations have been made for Iranian experts to shoulder the construction of section four in the Afghan territory in exchange for Afghanistan’s mineral products. Negotiations have been ongoing to continue the rail route to Mazar-i-Sharif, which will then be linked to Uzbekistan, Tajikistan, Kyrgyzstan and China, completing a corridor connecting Iran to Central and East Asia.”

The Khaf-Herat project, he said, is part of Iran-Afghanistan rail corridor and can play a significant role in increasing Iran’s transit share in the region, from Russia to India and vice versa.

“The construction of the project began in the fiscal 2007-8 but was delayed due to security reasons in the region. Over the years, some 4 trillion rials [$17 million] worth of investments have gone into the project, which is now worth a total of 15 trillion rials [$66 million],” Khademi said.

He added that the railroad will help promote Afghanistan’s development, complete and expand the rail network between the Economic Cooperation Organization member states, increase transits from Central Asia to India and restore Iran’s pivotal role as the connecting link between the East and West.

When completed, he said, the railroad will be Afghanistan’s first rail link to Iran, connecting the country to all of Iran’s southern ports in the Persian Gulf and the Sea of Oman.

The Afghanistan Railway Authority says the line forms one of its most important regional connectivity projects, as it will provide the landlocked country with a link to Iranian ports and to the rail networks of Iran, Turkey and Europe.

Freight traffic is predicted to reach 2 million tons a year, with imports to include oil, construction materials and food, and exports to include grain, dried fruit, plants and medical items.

AfRA said a passenger service is also being considered. Studies estimated that passenger traffic could reach 321,000 passengers/year and freight traffic 6·8 million tons/year.

The new line is the first 1,435 mm gauge route in Afghanistan, matching the standard gauge networks in Iran and Turkey. The 75-km Uzbekistan–Mazar-i-Sharif line and the two short cross-border lines from Turkmenistan to Afghanistan are 1,520 mm gauge, Railway Gazette reported.

“The annual transit to Afghanistan from the Commonwealth of Independent States and Turkey amounting to 1.2 million tons and 500,000 tons respectively can be redirected to Khaf-Herat railroad,” Rasouli said.

The official added that the Iranian government hopes the railroad will further increase social, economic and cultural ties between the two nations.

“We are counting on Khaf-Herat rail route to play a significant role in boosting interactions between Iran and Afghanistan,” he said.

Referring to the economic significance of the project, officials of Herat Chamber of Commerce and Industries have said that the implementation of the project will help further expand exports and imports relations between the Islamic Republic of Iran and Afghanistan.

“Khaf railroad project will help connect Herat to the entire world and develop our export ability,” said Abdul Latif Qanawizyan, the deputy head of Herat Chamber of Commerce and Industries.

The project will also help Afghanistan get easy access to Iranian ports at Chabahar and Bandar Abbas.