Domestic Economy

National Railroads Getting Back on Track

National Railroads  Getting Back on TrackNational Railroads  Getting Back on Track

Developing the rail transport system is at the core of the government’s agenda for the sixth five-year economic development plan (2016-21), said Mohsen Pour-Seyyed Aghaei, deputy minister of roads and urban development and managing director of the Islamic Republic of Iran Railways.

Speaking at the inauguration of Ahvaz-Andimeshk rail line construction project on Saturday, the official said policies to develop the country’s rail transport system have been formulated by the government and approved by the Expediency Council as one of the major objectives of the sixth development plan, IRNA reported.

The government aims to increase the capacity of railroads to annually transport 45 million passengers and 120 million tons of cargo from the current 35 million tons by 2025, said the official.

To achieve this, Pour-Seyyed Aghaei said, “The key loopholes in the rail network need to be closed.”

Establishing a second rail line between Ahvaz-Bandar Imam Khomeini and Ahvaz-Andimeshk in southwestern Iran, renovating Andimeshk-Dorood and double-tracking Ahvaz-Tehran rail lines are some of the government’s plans to improve the national rail network.

The government also aims to improve the link between rail and sea freight transport to facilitate the transport of minerals and other goods to and from Bandar Abbas and Bandar Imam Khomeini ports, said the authority.

  Development Plans

Plans to improve the national railroads have been on the government’s agenda since President Hassan Rouhani assumed office in 2013.

Speaking at the Third International Exhibition of Rail Transportation which was held on May 17-20 in Tehran, Minister of Roads and Urban Development Abbas Akhoundi said as much as $25 billion investment is required to achieve the railroad development goals for 2025.

In a separate remark, Minister of Industry, Mine and Trade Mohammad-Reza Nematzadeh said the national railroad system requires at least $7-8 billion investments within the next five years.

  Cross-Border Freight Transport

Iran is also developing rail links with the countries with which it shares land borders. The Kazakhstan-Turkmenistan-Iran railroad line was inaugurated on December 3, 2014 at the Turkmen-Iranian border, 85 km of which lie within Iranian territory. At the time, it was estimated that initially 3-5 million tons of cargos per year will be transported via the route.

The three countries are set to increase cargo transport in the long run to  20 million tons per year, Akhoundi said recently addressing the 12th meeting of the heads of Economic Cooperation Organization (ECO) railroad authorities held on May 17-18 in Tehran.

Rail lines linking the country to Iraq are also being developed. Iran and Iraq agreed on linking their rail networks to facilitate the movement of goods and passengers – a majority of them Iranian pilgrims visiting Iraq’s religious sites – when Akhoundi and his [then] Iraqi counterpart, Bayan Baqir Jabr al-Zubeidi met in Tehran back in December.

As part of Iran-Turkey railroad border meeting held in Tabriz last week, authorities from both countries announced plans to increase rail freight transport via Tabriz-Malatya route to 1 million tons per year from less than 240,000 tons in 2014, Mehr News Agency reported.

  Return to Growth

In its latest report on Iran’s freight transport which includes five-year forecasts to 2019, the Business Monitor International (BMI) research group has predicted 0.7% growth in the total tonnage transported by the Iranian railroads to 33.6 million tons and 0.2% growth in ton-kilometer in 2105.

These forecasts mark a return to growth following estimated contractions of 0.9% and 0.6% in the total tonnage and ton-kilometer respectively in 2014, the second consecutive year of declines in volumes. This growth forecast is in part predicated on the improving outlook for the Iranian economy, and partly owing to the country’s increasing importance as a transit hub between Asia and Europe.

The report further predicts that growth in rail freight will remain relatively lackluster over the course of the forecast period to 2019.

  Agribusiness, Mining to Drive Growth

The BMI also predicts that growth in the agribusiness and mining sectors in particular will help drive growth in freight transport as the country begins to tap into its massive reserves.

“To year 2017-18 wheat production growth will grow 6.1% to 15.1 million tons, and some of this will be transported by rail to serve both domestic markets and for export,” predicts the report.

Mining is another industry expected to spur growth in rail freight volumes, as it will be a key beneficiary of relaxed sanctions (imposed by the West against Iran over the country’s nuclear energy program). Iran is home to some 68 minerals, with more than 37 billion tons of proven reserves and 57 billion tons of potential reserves. These include considerable deposits in coal, iron ore, copper, lead, zinc, chromium, uranium and gold.

“Once this begins to become exploited, and likely transported on the country’s rail network, it will considerably boost growth in volumes,” the BMI report concludes.