Iran Opts for JVs to Develop Domestic Wagon Manufacturing

Iran is signing joint venture agreements with international companies to start manufacturing train wagons in Iran to meet its railroad expansion needs and reduce reliance on imports.

Iranian Rail Industries Development Company and Chinese rolling stock manufacturer Nanjing Puzhen Co. LTD. signed an agreement in Tehran on Tuesday to jointly manufacture 215 wagons to be used in subways trains across Iran, IRNA reported.

Based on the agreement, IRICO will be in charge of manufacturing the wagons.

According to Iran’s 20-year Vision Plan (2005-25), the 2,250 wagons currently in use in the country’s rail fleet should double by 2025.

The government of President Hassan Rouhani plans to reduce the high fleet age to 15 years to increase the efficiency of operating trains.

There is also massive demand for new wagons, as several railroads are being built across the country.

By 2025, existing lines should be electrified and double-tracked, and about 12,000 km of new lines are planned to nearly double the network’s size.

Major rail projects are currently in progress, including the electrification of a 1,000-km line between Tehran and Mashhad, a high-speed train connecting Tehran to Isfahan and connectivity projects with Azerbaijan and Afghanistan.

The government is keen to curb imports to help Iranian companies meet most of the wagon demand domestically.

Minister of Industries, Mining and Trade Mohammad Reza Nematzadeh earlier said his ministry is against importing wagons, as capable domestic companies can meet the country’s demand.

The minister’s remark came amid reports in Russia’s media that a Russian wagon maker had started exporting wagons to Iran.

Russia’s rolling stock and defense group Uralvagonzavod (UVZ) Research and Production Corporation said in early September it has started shipping 600 rail carriages to Iran as part of a deal to supply 5,000 wagons to the Islamic Republic.

The government’s anti-import stance comes, as pundits believe shortages in Iran’s manufacturing sector will cause a slowdown in the development of Iran’s rail industry.

The industry is in immediate need of some 1,500 wagons, experts believe, while merely a third of that figure has so far been produced domestically.

Newly-established joint ventures with international companies are expected to help enhance the capabilities of Iranian manufacturing companies.

  Siemens Steps In

On Monday, Germany’s Siemens also signed a contract to upgrade Iran’s railroad network, one of several deals agreed by German firms during a two-day visit to Tehran by Economy Minister Sigmar Gabriel.

Siemens said it will supply components for 50 diesel-electric locomotives to Iran. It did not disclose the value of the contract, but based on comparable deals, it could be in the low hundreds of millions of euros, Reuters reported.

Gabriel flew to Iran with a planeful of 120 managers who were keen to reestablish business relations with the Islamic Republic after it reached a landmark deal with world powers last year to scale back its disputed nuclear program.

Germany, which had been investing in Iranian railroads since 1927 when it helped build the Trans-Iranian Railroad, lost a lot of its share over the past decade. German giants such as Siemens have been active in the country since 1868.

Siemens used to be one of the market leaders in Iran. In 2006, the company won a €294 ($361.2) million deal to supply 150 locomotives for Iran’s railroads and several multimillion-dollar orders the following two years for gas turbines and compressors for power-plant producers.

In January, Islamic Republic of Iran Railways and German conglomerate Siemens transportation subsidiary, Siemens Mobility, signed several memoranda of understanding in Tehran to develop Iran’s railroads.

The agreements concern electrification of Tehran-Mashhad railroad and Tehran-Isfahan high-speed train; supply of 500 wagons and development of Iran’s railroad infrastructure as well as providing consultation and technology.

Siemens agreed to be in charge of electrification of Tehran-Mashhad railroad, equipping the route with signaling systems, provision of locomotives and full maintenance services.