Economy, Business And Markets

Iran to Lease 500 Aircraft

Iran to Lease 500 AircraftIran to Lease 500 Aircraft

The Minister of Roads and Urban Development has announced plans for renovating the air transport fleet through rent-to-buy leasing contracts.

Speaking at a meeting with foreign-based Iranian diplomats on Wednesday at the Foreign Ministry, Abbas Akhoundi said his ministry appreciates the variety of methods proposed to help develop the ageing transportation infrastructure including joint ventures with foreign firms, rent-to buy contracts and direct sales, the ministry's official news website quoted him as saying.

The country needs 400 aircraft for long and medium-haul flights, and 100 planes for domestic short-haul flights, he said and reiterated the necessity of enhancing the aging air fleet with many aircraft more than 35 years old.

"Refurbishing the fleet with 500 new planes requires about $50 billion. Since the country cannot afford this amount of money, we have decided to go for the rent-to buy leasing contract," he said.

"Talks were held with major aircraft manufacturing countries in coordination with Foreign Minister Javad Zarif," Akhoundi said without elaboration.

Hoping the planes will be bought by next year, he announced plans to build new airports in Tehran and Mashhad in cooperation with foreign firms and increase annual passenger traffic to five million at Imam Khomeini International Airport in south Tehran.

"We have reached a deal with the French to build the second terminal at IKIA, which will host 25 million passengers a year, as well as a new international airport in Mashahd."  

Rail Transport

According to the minister, the rail transport industry's needs could also be met both through leasing contracts and partnership with foreign companies.

He said $3 billion are needed to buy 2,800 passenger railcars and the ministry has plans to buy 5,000 freight wagons.

"Foreign investors can join the industry through the build-operate-transfer (BOT) or establish rail transport companies," he told the diplomats.

Build-operate-transfer contract is a type of arrangement in which the private sector builds an infrastructure project, operates it and eventually transfers ownership to the government.

"Build-lease-transfer contracts are an option for infrastructural development in rail transport, where the investor builds the railroad and leases it to the government in a rent-to-buy scheme."

Road Transport and Housing

Pointing to the high cost for improving the road transport network, Akhoundi said new regulations regarding the sector allow his ministry to review proposals made by interested investors.

He referred to the investment opportunities in the housing sector unveiled at Investment Opportunities Conference last month and said, "The total value of housing projects is estimated at €125 billion, and so far many investors have shown interest."

Wednesday's meeting was held at the Foreign Ministry's Education and International Studies Center with Zarif and ambassadors and senior diplomats based in 170 countries in attendance.