The volume of foreign cargo transited by rail from Iran declined by 35% in the first half of the current Iranian year (March 21-Sept. 22) compared with the similar period of last year, according to the secretary of Rail Transportation Companies Association.
In an interview with the Persian newspaper Ta’adol, Sobhan Nazari added that currently 500 locomotives are active on the country’s railroads. Noting that many engines have been grounded due to technical problems, he said Iran needs many more locomotives to claim its fair share of the regional rail transit.
“The problem is that the [state-owned] Islamic Republic of Iran Railways insists on getting the repairing budget from the government so that it could remain the owner of these locomotives. This is while the private sector has expressed its willingness to repair the rolling stock and put them back to use in no time. IRIR cannot remain the owner of the entirety of Iran’s railroads and rolling stock forever and wasn’t a good manager of rail transportation to begin with,” he said.
The official pointed out that the government reportedly plans to purchase 500 new locomotives in oil barter deals.
“We need to take into account that for each locomotive we also need wagons as well as a trained locomotive driver, all of which need budget. We need close to 1,000 more locomotives for our 14,000 kilometers of railroads. If this amount is procured, we can reach transit figures of up to 20 million tons per year, which can earn more than $20 billion in revenues for the country,” former roads minister, Rostam Qasemi, was quoted as saying by the Persian daily Shargh.
The problem, he explained, is that local companies do not have the capacity to meet the demand for locomotives, adding that manufacturing 1,000 locomotives will take Iranian manufacturers around 15 years.
“This is time we don’t have. Therefore, we plan to cooperate with foreign companies and link them to Iranian companies to meet this demand. Freight transportation via railroad in Iran is very slow and many wagons are substandard,” he said.
According to Miad Salehi, the CEO of the Islamic Republic of Iran Railways, about 200 locomotives went out of service around 20 years ago, and since then their spare parts are being used to repair the locomotives in operation.
“Some 200 more became dilapidated during between 2018 and 2021 and about 60 others went out of order last [Iranian] year [March 2021-22],” he said.
IRIR data show transportation via railroad stood at around 50 million tons in fiscal 2018-19 and declined to 40 million tons in fiscal 2021-22.
Rolling stock imports are banned and the market is entirely supplied by domestic producers, mainly Arak Province’s Wagon Pars Company, Isfahan’s Kowsar Wagon Company, Derakhshan Steel Company and MAPNA Group.
Lost Share of INSTC
In mid-November, Salehi recalled, marine container transport services were launched between Russia and China.
The transit company in charge chose to transport the shipments through the Suez Canal and the Black Sea.
“Iran’s [operationalization of] the International North-South Transportation Corridor (INSTC), has, until further notice, been left out of Russia’s transit plans,” he said.
After the Russian invasion of Ukraine, it seemed that transit routes from East to West would see a change. In late October, a Russian official said that the East-West transportation route would give way to the North-South corridor.
“The Russians have obviously opted for alternative routes, due to the missing links in INSTC, which have made transportation difficult along this route,” he said.
INSTC is a major transit route designed to facilitate the transportation of goods from Mumbai in India to Helsinki in Finland, using Iranian ports and railroads, which the Islamic Republic plans to connect to those of Azerbaijan and Russia.
The corridor connects Iran with Russia’s Baltic ports and give Russia rail connectivity to both the Persian Gulf and the Indian rail network.
This means goods can be carried from Mumbai to the Iranian port of Bandar Abbas and further to Baku. They could then pass across the Russian border into Astrakhan before proceeding to Moscow and St. Petersburg, before entering Europe.
INSTC substantially cuts the travel time for everything from Asian consumer goods to Central Eurasia’s natural resources to advanced European exports.
Iran and Russia have agreed on details of their plan to transit 10 million tons of goods along the corridor.
The agreement was made during a meeting of the two side’s transportation officials in Moscow on June 28 and 29.
Rasht-Astara Rail Project Remains Incomplete
The completion of the west wing of INSTC in the Iranian territory, that is, the Rasht-Astara railroad, needs about 220 trillion rials [$750 million], which is more than what the current budget of the country can afford, Nazari said.
"Rasht-Astara is a serious obstacle today for connecting the rail route [North-South ITC] into a single network," Sergei Pavlov, first deputy head of Russian Railways, said recently during the Made in Russia 2022 international export forum, noting that the RZD-Logistics subsidiary currently uses the route for multimodal transportation, Interfax reported.
"We are currently holding very intensive negotiations with the Iranian side and with the Azerbaijani side in order to launch the route," Pavlov said.
"I am certain that we will be able to hear positive news very soon, because all the participants, all the governments and the ministries of transportation and rail organizations are working toward the single goal of launching the railroad as soon as possible," Pavlov added.
As Vali Kaleji, an expert on Central Asia and Caucasian Studies wrote for the Jamestown Foundations: “The Astara–Rasht–Qazvin railroad, which will wind along the southwestern corner of the Caspian, forms a central link of the longer INSTC, a multimodal route linking India, Iran, Azerbaijan, Russia and Europe. The cross-border Astara [Iran]–Astara [Azerbaijan] section of the railroad was officially inaugurated on March 29, 2018, while the Rasht–Qazvin section inside Iran was implemented on March 6, 2019. Therefore, the only remaining gap is a 164-kilometer railroad section from Rasht to Astara. Until this railroad segment is finished, freight moving by train must be transferred to trucks and then back again.”
The Iranian government is determined to implement this important railroad project, which compares favorably along various metrics with a handful of other rail projects in the region, he added.
Notably, the Iranian-Armenian railroad from Meghri, Syunik Province, in southern Armenia, suffers from high costs and has not seen any progress since 2009. Whereas plans to restore Soviet-era east-west railroad corridors in the South Caucasus following the Second Karabakh War (Sep. 27–Nov. 10, 2020) have stalled due to differences between Armenia and Azerbaijan over the interpretation of the ninth clause of their ceasefire agreement, brokered by Moscow. The construction and completion of the Rasht–Astara railroad is, therefore, the only practical and accessible short-term prospect for Iran to connect to the South Caucasus. Its implementation will complete the last remaining section of the INSTC and create a physical rail link for the Republic of Azerbaijan, Georgia and Russia to Iran’s Chabahar Port on the Oman Sea and Bandar Abbas on the Persian Gulf.
Another important issue for Iran is expanding its freight corridors to the Moscow-led Eurasian Economic Union in order to take fuller advantage of the EEU-Iran Preferential Trade Agreement. In this regard, Iranian President Ebrahim Raisi last year said during a tour of Gilan Province (where the two cities of Rasht and Astara are located) that railroad and other transit infrastructure projects, along with the purchase of roll-on/lift-off vessels, should be accelerated to boost intra-regional trade.
In this situation, Iran desperately needs to complete the Rasht–Astara railroad. But since the Republic of Azerbaijan has been unable to fulfill its financial obligations due to sanctions, Tehran is turning to Moscow for support.
