Russian Railways launches €1.2 billion project in Iran

Russian Railways has begun the 1.2 billion-euro electrification of the Garmsar-Ince Burun railway line in Iran, which stretches to Turkmenistan and Kazakhstan, linking Central Asia to the Persian Gulf and beyond.   

Russian Railways CEO Oleg Belozerov and Iran’s Minister of Roads and Urban Development Abbas Akhoundi attended the start of operations, coming in the wake of the US decision to leave the JCPOA nuclear deal and reimpose sanctions on Tehran.

“This is the biggest sign that the JCPOA is firmly and strongly in force. Despite all pressures and threats by (US President Donald) Trump, a 1.2 billion-euro was launched today,” Akhoundi said.

Construction engineering company RZD International LLC, a subsidiary Russian Railways, is the main contractor in the project. The Russian government has also undertaken to provide 85% of funds for its implementation.

Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei has permitted the remaining 15% of the credit needed in the project to come from the National Development Fund of Iran, Akhoundi said.

“This is an important project in terms of economics and upgrade of the rail transport industry. The most important point is that we will witness a technological change in the transportation industry in Iran. We are transforming from diesel locomotives to electric locomotives,” he said.  

Belozerov said the project will double the maximum speed on the link to 120 km per hour and raise its capacity fourfold to 10 million tonnes a year.

“It will also increase safety and reduce emissions into the atmosphere. All this creates conditions for the growth of cargo turnover along the International North-South Transport Corridor and intensification of economic relations in the Caspian region,” Belozerov said.  

The International North-South Transport Corridor is a 7,200-km multimode network of ship, rail, and road route connecting India, Iran, Azerbaijan, and Russia.

The project launched on Monday involves electrifying the 495-km line linking Garmsar near Tehran to Ince Burun on the Turkmenistan border.

The contract covers design, sourcing of materials and equipment and construction of stations and tunnels, traction substations, section pillars, duty posts of the contact station and the power supply administration building.

Iran’s rail sector has become a magnet for rail engineering and rolling stock firms from all over the world, but European companies are most likely to lose out to their Russian and Chinese rivals in the wake of Trump’s decision to reimpose sanctions on Tehran.

According to Swiss firm Stadler Rail’s sales chief Peter Jenelten, “the craziest thing about the story” is that US sanctions should benefit Russia and China in the first place.

His remarks came last month as Stadler Rail said it was ditching a $1.4 billion railway deal in Iran because of Trump’s decision on the Islamic Republic.

Russian Railways First Vice-President Alexander Misharin said in April Iran had proposed railway electrification projects worth 3 billion euros to Russia.

The Russians have announced readiness to electrify the 600 km railway route between Tehran and the northwestern city of Tabriz.

In July 2017, Russia’s largest manufacturer of locomotives and rail equipment, CJSC Transmashholding, signed a 2.5 billion euro deal with IDRO Group in Tehran for joint production of rolling stock in Iran.