The total length of Iran’s railroad network stood at 15,037 kilometers by the end of last Iranian year (ended March 20, 2023), the Ministry of Roads and Urban Development reported.
The report noted that there are 986 locomotives, in addition to 29,741 freight wagons in the domestic rail fleet.
According to former minister of roads and urban development, Rostam Qasemi, around 50% of Iran’s locomotives are out of order and there is a severe shortage of freight wagons in the country.
“We need more than 1,000 locomotives,” he told the Persian newspaper Shargh last year, adding that the problem is local companies do not have the capacity to meet the demand for locomotives.
“The manufacture of 1,000 locomotives will take Iranian producers around 15 years. This is the time we don’t have. Therefore, we plan to cooperate with foreign companies, linking them to Iranian companies, to supply this demand,” he said.
He noted that freight transportation via railroads in Iran is very slow and many wagons are substandard.
According to Miad Salehi, the CEO of the Islamic Republic of Iran Railways, about 200 locomotives went out of service around 20 years ago and since then, their spare parts are being used to repair the operating locomotives.
“Some 200 more became dilapidated between 2018 to 2021 and about 60 others went out of order last [Iranian] year [March 2021-22],” he said.
He noted that the shortage of rail fleet is causing problems for different sectors.
The secretary of Rail Transportation Companies and Related Industries Guild Union says IRIR has strict rules that make it extremely difficult for private sector businesses to enter the field of rail transportation and locomotive production.
“Private sector businesses believe they can fix the dilapidated locomotives and put them back on track, but IRIR says new or secondhand locomotives need to be imported through oil barter since the budget allocated to Iranian railroads is not enough to meet repair expenses. I would side with the private sector because this way instead of waiting for locomotives to be manufactured and imported for months, we can repair many in a very short period of time,” Sobhan Nazari added.
Rolling stock imports are banned and the market is entirely supplied by domestic producers, mainly Arak Province’s Wagon Pars Company, Isfahan’s Kowsar Wagon Company, Derakhshan Steel Company and MAPNA Company.
Iran unveiled its first domestically-manufactured locomotive in November 2020 after 10 years, called “Pars 33”, and with that Wagon Pars Company, which had ceased manufacturing locomotives around 10 years ago, officially resumed its activity in the field of locomotive production.
Wagon Pars, launched in 1974 in the city of Arak in Markazi Province, is a subsidiary of the Industrial Development and Renovation Organization of Iran and the largest manufacturer of freight, passenger and subway wagons in the Middle East.
According to Reza Shahrestani, the head of Steel Sellers Association, rail transportation globally costs around one-sixth of road transportation.
“This is while in Iran we sometimes pay more for our consignment to be transported via rail [compared to road],” he said.
Referring to the slow speed of rail transportation in Iran, he said, “Elsewhere in the world the average speed is around 80 kilometers per hour but here it stands at between 20 and 25 km/h.”
A report, published by Research and Markets, an American-based specialist in business analysis, has singled out rail freight as a significant area of commercial growth in the years to come.
The report said the global rail freight transport market was valued at $247.39 billion in 2020, and anticipates a compound annual growth rate (CAGR) of around 2% during 2021-26. That makes rail freight a significant part of global economic recovery, and has investors taking note.
“North America leads the global rail freight market”, says the company’s senior press manager, Laura Wood. “Asia-Pacific is expected to overtake North America during the forecast period. Moreover, the rise in global trade and various trade agreements are boosting the global trade flows.”
While rail freight can play a role in globalization, the report notes that in many regions, rail freight is a factor in developing local economies.
“In some regions of Central Asia, Eastern Europe, South Asia, Southeast Asia and Sub-Saharan Africa characterized by groupings of many small countries, rail freight can increase economic integration by providing access to international and regional markets and connecting landlocked countries,” Wood said.
Two rail projects have gained increasing significance in Iran over time, as the government is looking to complete their construction by holding talks with foreign parties involved.
Rasht-Astara Rail Project
An agreement inked with Russia for constructing Iran’s Rasht-Astara mega rail project will be finalized next month.
Deputy Minister of Roads and Urban Development for Construction and Development of Railroads, Ports and Airports Abbas Khatibi made the announcement on Wednesday and stated that talks are underway with the Russian officials for constructing this mega rail project.
The International North-South Transportation Corridor is currently the most important corridor of the country, he said, adding that the Rasht-Astara railroad is the most significant rail project in the country.
“Serious talks are underway with the Russian officials for participating in two financial and technical sectors of this giant project,” Khatibi was quoted as saying by Tasnim News Agecy.
Resources of letter of credit (L/C), opened by Russia within the framework of a loan for the completion of construction operation of Rasht-Astara railroad, should be used optimally, he emphasized.
“The agreement inked with Russia would be finalized by the end of the next Iranian month [May 21],” he said.
Khatibi pointed to the participation of the Republic of Azerbaijan in this giant project and said, “Intensive talks are underway to draw up a bilateral agreement with Russia. After that, the trilateral agreement will be inked by Iran, Russia and Azerbaijan,” Eurasia Review reported.
After the First Karabakh War, the regions of Fuzuli, Jabrayil and Zangilan near the Iranian border came under Armenian control and the railroad connection between Nakhichevan and mainland Azerbaijan was severed.
“While the northern railroads from Armenia to Georgia and Azerbaijan to Russia continued to operate, Iran’s rail connection with the Caucasus was cut and cargo exchanges through this border dropped sharply. This unfortunate situation has not changed after three decades and despite the high volume of trade and travel, Iran does not have a direct rail connection with the Caucasus region. In fact, while to the east of the Caspian Sea there is a working railroad from Russia through Kazakhstan and Turkmenistan to Iran, along the western shore of the Caspian in the South Caucasus region, the linked rail networks of Russia and the Republic of Azerbaijan still lack a physical connection with Iran,” Vali Kaleji, a Tehran-based expert on Central Asia and Caucasian studies, wrote for Valdai Club.
This has had a very negative impact on the volume and pace of trade with the Caucasus countries as well as with Russia, causing, inter alia, heavy traffic on both sides of the land borders, including the Astara-Astara (Iran-Azerbaijan) and Norduz-Meghri (Iran-Armenia) border crossing points. Over the last two decades, Iran, Armenia, Azerbaijan, and Russia have each proposed bilateral or multilateral rail projects to overcome the rail and transit gap. The construction of the 164 km Rasht-Astara railroad, the 55 km Zangilan-Nakhchivan railroad through Iranian territory and the revival of the Soviet-era railroad (Jolfa-Nakhchivan) are main important rail projects that regretfully have not yet been fully completed.
Among the incomplete rail projects mentioned, the 164 km Rasht-Astara railroad route is of great importance in the International North–South Transport Corridor (INSTC), because it is the only remaining rail part of this corridor and is the missing link in what would be a direct rail link from the Persian Gulf to Moscow and St. Petersburg. On one hand, in 1941 the Soviet rail network was extended southwards to Astara, Azerbaijan, located at the southern border with Iran, across from an identically-named city in that country. Therefore, the rail route from Moscow and St. Petersburg to Astara in the Republic of Azerbaijan on the Iranian border has been active since 1941. On the other hand, there was a rail gap inside of Iran, between Astara, Gilan Province (Iran) and Qazvin, located 150 km (93 mi) northwest of Tehran, in Qazvin Province.
For this reason, in 2002, a 7,200-kilometer-long multimodal network of ship, rail and road routes was created within the framework of INSTC.
The first joint effort was made by Iran, Azerbaijan, and Russia to connect the Iranian railroad network to the Caucasus region. The three parties signed an agreement on constructing the route in 2005, building on a Soviet extension of the railroad southwards to Astara in Azerbaijan, at the southern border with Iran. In 1941, the railroad was also extended southwards to Astara, located at the southern border of Azerbaijan with Iran. Therefore, in order to establish the rail contact, it was necessary to build a railroad from Astara to Rasht and Qazvin in Iran.
The construction of the Rasht-Qazvin railroad started in 2009 and took nearly a decade to complete. The following map clearly shows the route of the Qazvin-Rasht railroad in Gilan Province of Iran.
The route of the Qazvin-Rasht–Astara railroad southwest of the Caspian Sea
However, the construction of the Rasht-Astara railroad has, unfortunately, faced serious problems. Therefore, given Iran’s practical need for the construction and completion of the Rasht-Astara railroad on the one hand, and Azerbaijan’s decision not to expose itself to the effects of US secondary sanctions by providing its share of the agreed investment (a $500 million loan for this purpose) on the other, Tehran has turned to Moscow for support. Tehran has sought to utilize this situation, stepping up efforts to attract Russian investment in the Rasht–Astara rail project.
It was reported that during Iranian President Ebrahim Raisi’s visit to Moscow in January 2022, the two sides finalized a previously agreed-upon $5 billion credit line for the completion of several development projects in Iran. As noted by the Iranian Minister of Economy Ehsan Khandouzi, the Rasht-Astara railroad is one of the projects covered by the Russo-Iranian agreement. The following map clearly shows the route of the Qazvin- Rasht–Astara railroad to the southwest of the Caspian Sea.
But the conflict in Ukraine and the extensive Western sanctions against Russia have caused attention to become more serious than in the past toward INSTC, such that the 164-km Rasht-Astara railroad is an important part of it.
Under these circumstances, “Iran is seeking Russia’s financial support for the project that is estimated to cost €800 million, according to latest estimates by the Iranian government”. In this regard, Qasemi visited Moscow on April 30, 2022. Following his talks with the Russian Transport Minister Vitaly Savelyev, the two officials signed a comprehensive agreement on cooperation in the field of transportation including complete the missing Rasht-Astara portion of the INSTC”. In the latest development signifying growing regional prioritization of the 164- km Rasht-Astara railroad and the INSTC more broadly, Russian presidential aide and State Council Secretary Igor Levitin, accompanied by the senior railroad officials of Iran, inspected the proposed track route by helicopter on January 18, 2023.
Following this visit and according to the agreement between two countries, with the investment of the Russians, the rail project is supposed to be completed within three years, which is one year less than the forecast made and Iranian contractors will fully implement the infrastructure of the railroad. Since 12 km of the construction of the Rasht-Astara railroad was done by the Iranian contractor, it will need to finish the 152-kilometer railroad with Russian financing.
Iran-Iraq Rail Connection
Another remarkable rail project is one that will see Iran’s railroad connected to that of neighboring Iraq.
Iraq and Iran agreed to start the construction of the Shalamcheh-Basra railroad, IRNA reported recently.
Iraq’s Minister of Transport Razzaq Mohibis Al-Saadawi met in Iran with the Iranian Minister of Roads and Urban Development Mehrdad Bazrpash and announced that they have agreed on the implementation of the rail project.
The two ministers discussed the mechanism of constructing the Shalamcheh-Basra railroad and all other issues related to the implementation of the project.
The Iraqi transport minister affirmed that the path of the railroad has been specified by the Iraqi side, indicating Iraq’s seriousness to start implementing the project.
Al-Saadawi added that the Iraqi government took into consideration the allocations for this project in the new financial budget.
The two ministers also discussed the project of Khosravi railroad and highway leading to Baghdad, in addition to issues related to land maritime cooperation.
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