A private Russian wagon manufacturer is set to provide Iran with 500 freight wagons through leasing contracts, head of the Islamic Republic of Iran Railways announced on Wednesday.
"Following the lifting of the sanctions we can use several purchasing methods, but leasing is the best way to enhance the country's rail fleet because such contracts need less initial capital," Mohsen Pour Aqaei was quoted as saying by ILNA. Details of the deal were not available.
"Leasing contracts need to be covered by repayment protection insurance," he said. "Now that sanctions are removed we can use foreign insurers' coverage to guarantee (lease) payments."
There have also been talks to purchase passenger railroad cars from foreign companies, according to the official, though "no plan has been finalized yet."
Abbas Akhoundi, minister of roads and urban development had earlier said $3 billion are needed to buy 2,800 passenger railcars and the ministry has plans to buy a total of 5,000 freight wagons.
Plans to develop the national railroad network have been on the government agenda since President Hassan Rouhani took office in the summer of 2013. Rouhani has said that railroad development is a legacy his government plans to leave behind.
Despite the enormous benefit of railroads, the key sector was orphaned over the last three decades as successive governments focused on road transport only to find out later that it was at best unsustainable and at worst unaffordable due to high costs of trucks and busses plus the wear and tear of inter-city roadways.
Caption: Plans to develop the national railroad network have been on the government agenda.
