The Forum for Partners in Iran's Marketplace

January 2018, No. 86

Trade & Business

Iran, South Korea Sign
€700m Deal to Make Railbuses

Iran and South Korea are finalizing talks to jointly manufacture railbuses to serve public transportation in suburban Tehran.

The announcement was made by the Managing Director of the Islamic Republic of Iran Railways Saeed Mohammadzadeh at a press conference (Oct. 23).

According to preliminary agreements, Iranian and Korean companies will jointly build railbuses under a 700-million-euro deal that is expected to be signed by March 2018, the official noted.

According to Mohammadzadeh, each day over 500,000 cars serve to take commuters to and from the capital city of Tehran, posing great economic, environmental, and health tolls on the people.

He said in a period of four years, an Iranian-Korean consortium will provide part of the wagons needed to create the railbus system in suburban Tehran.

In the past Iranian fiscal year (ended March 20), 6 million out of 32 million suburban passengers in Iran were transported by rail.

Mohammadzadeh said one of the main issues that the railway company has been planning over the past years is the development of suburban trains, adding that with the support of the Parliament in the Sixth Development Plan, a suburban train company will be established under the railway company.

Suburban trains are not considered economical choices, but the country needs them seriously. The railway company supplies the fleet but it will be used by transportation companies.

Mohammadzadeh said that 750 million people conduct suburban trips in Tehran Province annually, adding: “In 1395 (2016/17), we conducted about 23 million suburban trips by train, which will reach 40 million in 1400 (2021/22) through our planning. If we just consider the trips in Tehran Province and if the railway is supposed to get a share of 10% from these trips, some 75 million suburban trips should be registered. Hence, there is a significant capacity which requires serious planning.

The railway company chief, referring to a significant share of the railway in suburban trips in the developed countries, said: “In some countries, suburban trains account for 30% and in some others 50% of the share of suburban trips around large cities. However, in Iran, this share represents only 1% of the total transport, which requires significant changes.

Referring to the measures taken in the railways to increase the capacity of freight trains, he stated: “One of our plans is to increase the number of suburban trains that have been roughly quadrupled over the past four years. By the year 1400 (2021/22), we must have a 30% share of the total transported cargo in the country, and roughly 195 million tons of cargo should be transported by railway. Therefore, all the actions should be increased and sustained. Iran’s mineral cargo last year was 60 million tons, 20 million of which was handled by railroads and 40 million by land roads. If, according to scheduled plans, displacement of mineral cargo is to increase in the near future one cannot expect the roads share remain the same because the infrastructure would not have the capacity to let this happen.

He added: “Along with the improvement of the lines, attempts to change the financing of the railway field were another program. We have tried to finalize the wagon supply contracts by using the funds provided by the private banking sector. One of these contracts is an order to Russia to build six thousand freight wagons with the cooperation of Iranian parties under a five-year plan. Today, Iran’s Freight Fleet possesses 22 thousand wagons and we will need another 28 thousand wagons over the next four years.”
Mohammadzadeh said that the railway organization will provide significant support to investors in this area, adding that based on the Majlis approval, the organization will officially guarantee all investments in this field.

Referring to the railway organization’s major contracts and plans for railways development, he explained: “One of these contracts concerns the electrification of Tehran-Mashhad railways. The necessary measures have been taken to finalize the contract. We hope that sometime in January and upon opening of the L/C the construction operations will enter a new phase. Along with this, the railway organization is following up electrification contracts of Garmsar-Ince Burun railroad and Tehran-Qom-Isfahan Expressway. The work progress of these projects has been good and we hope to commission them in a not too distant future.”


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  January 2018
No. 86