German Minister Heading to Iran, Siemens Hopes for Rail Deal
German Transport Minister Alexander Dobrindt will travel to Iran with a trade delegation on Friday to meet Abbas Akhoundi and Mohammad Reza Nematzadeh, Iranian ministers of roads and industries respectively, his spokesman has announced.
An industry source said Siemens would be going too, Reuters reported.
Siemens has long been in negotiations with Iran over an order for track technology and ICE 3 trains, a model of intercity train used in Germany. The deal would be worth more than €2 billion ($2.25 billion), industry sources say.
German Economy Minister Sigmar Gabriel traveled to Iran at the start of the month and during that trip Siemens got an order to build parts for 50 locomotives.
Together with Iran’s Economy Minister Ali Tayyebnia, Gabriel co-chaired the fifth session of Iran-Germany Economic Commission in Tehran on October 3. German firms signed 10 business agreements with Iranian partners at the gathering.
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.
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.
Deputy Minister of Roads and Urban Development Mohsen Pourseyyed Aqaei said German and Chinese banks have provided €400 million in loan to finance deals between Iran and Siemens to jointly manufacture wagons and locomotives in the Islamic Republic.
Germany has traditionally had close economic ties with Iran and after last year’s nuclear accord, which paved the way for ending sanctions in place for years, German firms are now seeking business there again.
According to Rene Harum, the head of Iran-Germany Chamber of Industry and Commerce, trade between the two countries stood at €2.5 billion in 2015. He says the figure is expected to reach €5 billion in 2017 and €10 billion in the coming years.
Harum says Germany is willing to become Iran’s top trading partner, replacing China whose trade with Iran topped $22 billion in the last Iranian year (March 2015-16).