Iran, Russia Sign Deal to Finance €3b for Joint Rolling Stock Production

Russia signed a deal with Iran on Monday to finance €3 billion for joint manufacturing of 20,000 freight cars, 1,000 passenger cars, 350 locomotives as well as rail transportation equipment.

The agreement was signed by deputy minister of roads and urban development and head of the Islamic Republic of Iran Railways Saeed Mohammadzadeh as the Iranian side. The financiers are the Russian Export Center and Export Insurance Agency of Russia (EXIAR) whose respective CEOs Petr Fradkov and Alexey Tyupanov signed the deal as the Russian side.

As per the agreement, 6,000 cars will be manufactured in the first phase of the agreement by Russia’s United Wagon Company in cooperation with three Iranian companies, the Arak-based Wagon Pars, Arak Steel and Wagon Kowsar, the contract for which was signed in February.

According to Abbas Akhoundi Minister of Roads and Urban Development, who was also present at the signing ceremony, at present there are 28,000 freight cars and 2,200 passenger wagons in Iran. Once the new wagons join the fleet, he says, there will be a 70% and 50% rise in the number of these wagons respectively, IRNA reported.

Headquartered in Moscow, UWC is one of the largest rail firms in Russia and the Commonwealth of Independent States. The holding oversees the design, production, transport and leasing as well as service maintenance of railroad cars. It is owned by ICT Group, an investment venture based in Russia.

Iran has another agreement worth €2.5 billion with Russia’s CJSC Transmashholding for joint production of rolling stock in Iran. Based on this contract signed in late July, a joint venture is to be formed between the Industrial Development and Renovation Organization and the Russian company with the Russian side holding an 80% stake and the Iranian side a 20%.

Transmashholding CEO Kirill V. Lipa told the Financial Tribune after the signing of the contract that the capacity of the joint venture will depend on the depth of localization. “For assembling, we’re thinking about 300-400 units per year.”