Esfahan Steel Company has committed to provide 5,000 tons of rails for a major project connecting Chabahar Port in southeastern Iran to the city of Zahedan that borders Pakistan and Afghanistan.
An agreement to that effect was signed by Isfahan-based ESCO and Khatam al-Anbiya Construction Headquarters on Saturday, Fars News Agency reported.
In September 2019, the Iranian Cabinet decided to allocate €300 million for the railroad project located in Sistan-Baluchestan Province, from the National Development Fund of Iran, the country’s sovereign wealth fund. The decision came after the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei authorized the allocation.
The 610-kilometer railroad project got off the ground in the fiscal 2010-11, only to come to a halt for three years due to a lack of resources. The execution of the project resumed in the year ending March 2015, after a change of contractor.
“However, the project has made less than 40% progress so far,” Abbas Khatibi, Transportation Infrastructure Company of Iran’s deputy for construction and development affairs, said.
The official noted that 40,000 billion rials (over $260 million) are needed to complete the project.
“The project, which includes the Zahedan-Khash-Iranshahr-Chabahar rail route, will be completed in four years, provided resources are allocated as per the schedule,” he said last year.
According to Roads and Urban Development Minister Mohammad Eslami, the country has 14,000 kilometers of railroads and the government is mulling over doubling the existing network.
Eslami has promised to inaugurate the project by March 2022.
The railroad to Zahedan is crucial, as it is vital for connectivity to landlocked Afghanistan via Chabahar. The port in Iran’s Sistan-Baluchestan Province is strategically important for India too, allowing it access to Afghanistan while bypassing Pakistan.
After connecting Chabahar to Zahedan, the railroad will be linked to Zaranj in Afghanistan. Hence, when the Afghan cargo arrives in Zahedan, it can be transported by a 1,380-km railroad to Chabahar and then shipped to India.
Major Transportation Agreement
India, Iran and Afghanistan signed the trilateral transit agreement or the Chabahar agreement in May 2016. India took over operations at the Shahid Beheshti Terminal at Chabahar Port in December last year through the special purpose vehicle, India Ports Global.
As per the agreement, India would build a 600-square meter cargo terminal and a 640-square meter container terminal.
However, only a portion of the two berths have been finished because of deteriorating relations between the US and Iran after the election of US President Donald Trump in November 2016 that culminated in the reimpositon of economic sanctions in 2018.
In December last year, India took over operations of part of Shahid Beheshti Port.
Chabahar is Iran’s only oceanic port town and consists of two separate terminals: Shahid Kalantari and Shahid Beheshti. The opening of first phase, namely Shahid Beheshti terminal (out of five phases defined for the project), which has tripled its capacity to 8.5 million tons (equal to that of all the northern ports of the country), allows the docking of super-large container ships (between 100,000 DWT and 120,000 DWT) and increase India’s connectivity with Afghanistan.
“Iran and India need to work together to expedite rail connectivity to Afghanistan and procure equipment for the development of Chabahar Port,” Iran's Foreign Minister Mohammad Javad Zarif said in Mumbai earlier this year.
He noted that the problem with the project’s progress is that India faced difficulty in procuring the port’s equipment despite the exemption.
"The other issue is connecting Chabahar to Afghanistan and to Central Asia through rail. We need to complete the Chabahar-Zahedan rail network. We have the infrastructure for that, but we need rails. We are in negotiation with India for providing rails. We produce our own rails but not at the scale we need. So, Iran and India need to work together on procurement of equipment for the port as well as finishing the rail link," he said.
According to Behrouz Aqaei, director general of Ports and Maritime Organization of Sistan-Baluchestan Province, the current Iranian year (ending March 19) saw a 100% rise in exports of Afghanistan via Iran’s Chabahar to other countries, the Ministry of Roads and Urban Development reported on its website.
History of Domestic Rail Production
ESCO (locally known as Zob Ahan Esfahan) is the first and largest manufacturer of constructional steel products in Iran. It started production in 1971 with an annual capacity of 600,000 tons.
The company has expanded significantly ever since and become Iran's third biggest steel exporter. The company owns the Zob Ahan Football Club.
ESCO supplied the Construction and Development of Transportation Infrastructure Company with the first batch of domestically produced 60E1 (UIC60) rails in September.
The rails were used in the Mianeh-Tabriz railroad in East Azarbaijan Province in northwest Iran. The 132-kilometer-long Mianeh-Bostanabad railroad was inaugurated by President Hassan Rouhani in November.
The railroad is part of the longer Mianeh-Tabriz project connecting East Azarbaijan Province to the national rail system.
“Tens of specialists have worked on this project for more than 20 years. The research stage for the production of domestic rail has taken years to complete and today efforts by ESCO and the Industries Ministry have borne fruit,” Eslami said.
The 60E1 (UIC60) rail model is manufactured as per the European standard EN 13674-1. It is a type of T section rail also known as flat bottom rails with a 60.21 kg mass per meter.
“Based on the goals of the Sixth Five-Year Development Plan (2017-22), Iran is to expand its railroads to 25,000 kilometers, with each 10 kilometers requiring 500 tons of rails,” he said.
The idea of a large-scale domestic rail production was first floated back in 2005. It was triggered when the ruling government thwarted a deal to import 100,000 tons of rails from Spain, arguing that imports should be curbed so that domestic production can thrive.
This led to the signing of a deal between ESCO and the Islamic Republic of Iran Railways. The company’s rails, however, received a lukewarm reception due to their limited speed support and low quality compared to the global offerings at the time.
Consequently, IRIR placed no new orders and called on ESCO to produce UIC60 rails, which are capable of supporting higher speed limits.
Fast-forward to July 2014, IRIR and ESCO signed another agreement for the production of UIC60 rails, with the deadline for its delivery set for September 2015.
ESCO missed the deadline and no new developments took place up until late 2016, when the company launched its new rail production line in cooperation with the German Kuttner Company.
Previously on June 17, 2018, ESCO delivered a first batch of U33 rails to IRIR.
The batch contained 500 tons of U33 rails manufactured using the latest technologies and based on Europe's EN13674 standard, according to an ESCO statement.
"Producing rail based on the latest European standards was painstaking and complicated, and yet worth the pain to achieve self-sufficiency," said ESCO's Managing Director Mansour Yazdizadeh.
The official emphasized that ESCO is capable of meeting IRIR's demands with a rail production capacity of 400,000 tons per year, and will export its excess production.
ESCO signed a contract with IRIR to produce 40,000 tons of U33 rail tracks back in October 2016, 10,000 of which were to be delivered by the end of the fiscal 2016-17. The company repeatedly missed the deadline and extended it to date, and mostly blamed IRIR for not funding production by pre-purchasing the order.
ESCO was jointly established in 1965 by Iran and the Soviet Union’s Tyazhpromexport Company in Isfahan Province.
The EN13674 standard specifies Vignoles rails (flat-bottomed rail) of 46 kg/m and greater linear mass for conventional and high-speed rail track usage.
U33 rail tracks are capable of supporting a speed of up to 160 kilometers per hour.
