Iran, Russia Discuss $3.7b Rail Project

Iran has proposed conducting a project with Russian Railways to electrify a 3,000-kilometer railroad that might cost up to €3 billion ($3.7 billion), the company’s First Deputy CEO Alexander Misharin said on Monday.

“Three thousand kilometers, a big project, we agreed to sit down at the negotiating table and discuss it. This is a big project; we need to fold the financing scheme; this is €2-3 billion. This sounded several times today,” Misharin, who visited Tehran as part of the Russian delegation, told Sputnik.

“The company already has a contract signed. We already signed a contract for the electrification of the Garmsar-Inche Burun line, and it includes, among other things, access to other lines. Now we are considering what these will be, the sections that are part of the North-South corridor, maybe this will be Tehran-Tabriz … This is the next stage of our discussion. Today the Iranian side proposed to expand our cooperation; we are ready to discuss it,” he said.

A contract worth €1.2 billion was signed between Iran and Russia in 2015 on electrifying Garmsar-Sari-Gorgan-Incheh Borun railroad.

“As per the agreement, the electric locomotives will be manufactured inside Iran and in cooperation with Iranian firms,” Mohsen Pourseyyed-Aqaei, former managing director of Islamic Republic of Iran Railways, said at the time.

The official added that the implementation of the project would send transit capacity to 8 million tons. The contract will be financed by Russian banks and take 36 months to complete.

“Russia is a prominent railroad power. It has an extensive network of railroads, which account for 85% of all freight transported by the country. An important element of our cooperation is the International North-South Transport Corridor that, as you know, begins in Europe and extends to India via Russia, Azerbaijan and Iran. We seek to ensure that Iranian railroads become the primary transit element of the corridor,” the chairman of Islamic Republic of Iran Railways’ International Affairs Department told Sputnik Persian in September 2017.

Abbas Nazari added that the length of the Iranian segment of the corridor is about 2,000 kilometers.

“Russia and Iran need each other to move their freight between Europe and Asia, and Tehran enjoys an unprecedented level of technological cooperation with Moscow,” he said.

The official further said Iran cooperates with Russia on several important rail-related ventures, like the joint manufacturing of railroad carriages.

The Industrial Development and Renovation Organization signed a €2.5 billion contract with Russia’s CJSC Transmashholding in Tehran in July 2017 for the joint production of rolling stock in Iran.

Based on the contract, a joint venture will be formed between IDRO and the Russian company, with the Russian side holding an 80% stake and the Iranian side 20%.

Transmashholding CEO Kirill V. Lipa told Financial Tribune after the signing of the contract that the capacity of the joint venture will depend on the depth of localization.

“For assembling, we’re thinking about 300-400 units per year,” he said.

The largest manufacturer of locomotives and rail equipment in Russia with Dutch firm Breakers Investments BV and French engineering group as its stakeholders, Transmashholding will be taking over Iran’s Wagon Pars Company to start manufacturing.

The International North–South Transport Corridor is a 7,200-kilometer interconnected network of railroads, roads and shipping lanes designed to facilitate the flow of freight through India, Iran, Russia and Azerbaijan, as well as European and Central Asian states.

On Monday, a delegation of Russian State Duma led by Speaker Vyacheslav Volodin and comprising representatives of state companies and ministries paid an official visit to Iran.

Within the framework of the visit, a meeting was held with Iranian President Hassan Rouhani and Speaker of Iranian Parliament Ali Larijani. A joint business forum was held at Iran Chamber of Commerce, Industries, Mines and Agriculture in Tehran.

Volodin and Larijani on Monday signed an agreement to set up a new high-level commission on cooperation between the two countries’ parliaments. The commission, co-chaired by the speakers, has been created to help exchange legislative experience and coordinate bilateral activities in international organizations, including for ensuring regional security, and countering terrorism and drug trafficking.

Parliamentary consultations will be held on energy, transport, industry and scientific issues and the exchange of technologies, according to the Duma statement.

The commission will convene annually and alternately in Russia and Iran. The task for the two parliaments is to render legislative support to agreements reached at the level of the heads of state, Volodin said, as reported by RT.