Domestic Economy

Iran Transport Projects Attract $12b in 2 Years

Work is in progress to attract domestic and foreign private investments for more than 80 major transportation projects
One of the major projects is the development of Imam Khomeini International Airport.One of the major projects is the development of Imam Khomeini International Airport.

Ministry of Roads and Urban Development has signed 13 contracts worth $12 billion since March 2015 with investors from the Iranian private sector and foreign companies for investment in air, road, marine and rail transportations since March 2015.

Director General of the Ministry of Roads and Urban Development's Investment Office Mehdi Heydari also said two under-construction projects, namely the 370-km freeway worth 4.1 trillion rials ($1 billion) connecting Kerman to the Persian Gulf Port of Bandar Abbas and the 91-km freeway in Isfahan Province worth $123 million, have been implemented with domestic private sector investment.            

The latter project is expected to be completed in two years.

Heydari also highlighted a contract signed in January to renovate Iran’s aging cargo trucks.

Based on a trilateral contract signed by Road Maintenance and Transportation Organization (affiliated to the Ministry of Roads and Urban Development), Iranian Fuel Conservation Company and Mammut Industrial Group, 5,000 aging trucks are to be replaced with new ones.

The trucks are to be financed via leasing, with 80% of the costs covered by government facilities.

Established in 1992, the private Mammut Industrial Group is active in a variety of fields, including the manufacture of cargo and commercial vehicles, trailers and prefabricated buildings.

Its subsidiary, Mammut Diesel, which produces both CBU and CKD trucks, is the official sales and services representative of SCANIA—the Swedish manufacturer of heavy trucks.

According to Davoud Keshavarzian, deputy minister of roads and urban development, 120,000-130,000 vehicles in Iran’s cargo truck fleet have an average age of over 25 years.

As part of an agreement between the Ministry of Roads and Urban Development and Oil Ministry, 65,000 old trucks are to be replaced within five years.

In the aviation sector, Heydari referred to development projects to increase the capacity of Tehran’s Imam Khomeini International Airport. One of these projects, Salam Terminal, is being implemented by Mostazafan Foundation, a large state organization involved in large-scale economic activities.

The official also highlighted deals with Airbus and Boeing to purchase and lease 200 passenger aircraft. The contracts were signed in December and one Airbus plane has been delivered so far.

Two others are expected to arrive before the end of the current Iranian year on March 20, 2017.

The two major deals have an overall value of more than $30 billion at list prices, even though Iran says it has got substantial discounts from Boeing and Airbus.

According to ministry officials, Iran is paying only 15% of the prices, while the rest will be covered by global financing firms.

In the marine sector, Heydari said, a $330-million contract has been signed with Aria Banader Iranian Port & Marine Service Company to develop the southeastern port of Chabahar in Iran’s Sistan-Baluchestan Province.

As for the rail sector, he pointed to the high-speed railroad connecting Tehran to Isfahan, a central tourism hub. China Railway Engineering Corporation has signed a €1.7-billion contract to carry out the project.

“Work is in progress to attract domestic and foreign private investments for more than 80 major transportation projects,” he said. “This way, we can compensate for the shortage of government credit.”

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