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Rail rush for $25bn of Iran opportunities as trade sanctions lifted.

Posted by Luke Upton on Feb 4, 2016

1Tehran_Rail_StationThe lifting of economic sanctions on Iran following its agreement to roll back the scope of its nuclear activities has resulted in multinational firms rushing to establish a position in the country – and the major rail companies are no different. The sanctions that had isolated and severely limited the Iranian economy have been lifted, making the country the largest to re-join the global economy since the re-emergence of Russia in the early 1990s. Already companies like Airbus, Peugeot and Italian steel firm Daniel have signed contracts to invest in Iran with dozens more looking at opportunities.

Michael Tockuss, managing director of the German-Iranian chamber of commerce told the BBC of the importance on the lifting of the sanctions; “This is a day we were awaiting for years. There will be big changes. We will also get some 300 Iranian individuals and companies off the (EU) sanctions list. Up to now, we couldn't do a single business transaction with them, not even selling bread or biscuits." So which rail companies have been quickest out of the blocks to take part in the modernization of Iran's rail network?

Early movers were Arep the architectural and urban planning subsidiary of SNCF, who in July 2015 were awarded a contract worth around €7m to carry out studies into the modernisation of three of Iran's busiest stations, Tehran, Mashhad and Qom stations as multimodal hubs. Head of AREP’s board of directors Etienne Tricaud said the project includes comprehensive design, optimization and modernization of the railway stations to accommodate commuter trains, subways and high-speed trains.

January 2016 saw reports in Iranian media that Siemens have won several deals to renew the country’s rail infrastructure and specifically the electrification of the Tehran-Mashhad line. Although not confirmed by Siemens, several respected local news services have run the story.ject includes comprehensive design, optimization and modernization of the railway stations to accommodate commuter trains, subways and high-speed trains.

According to the reports on Press TV, Siemens will provide the signalling equipment, the electric locomotives, passenger train coaches as well as the related maintenance services for the railroad. Whilst a second deal is focussed on the construction of Tehran-Isfahan high-speed railway and a third the provision of 500 passenger train coaches. Siemens is also reported to have agreed to provide training for the Iranian rail staff.

Freight in Iran

Fellow European rail giants Alstom has this week signed a Memorandum of Understanding (MoU) with IDRO - the Industrial Development & Renovation Organization of Iran - to develop industrial cooperation within both mainline and urban transport. The aim of the MoU is to initiate discussions for an industrial cooperation as well as train production and maintenance in Iran to better address the country’s needs for mainline and urban transportation.

A joint-venture is also being considered to execute the projects. This partnership would participate in the development of the country’s infrastructure and urban and national public transportation, and contribute to the redynamisation of the local economy.

Eurasia_Eboo-3“Alstom is pleased to renew its collaboration with the Islamic Republic of Iran which will benefit the country’s economy, modernise its industry and enhance the mobility of its residents. This MoU reflects the strong desire of the Iranian authorities to develop the country’s railway sector and Alstom is looking forward to accompanying Iran in its transformation” said Henri Poupart Lafarge, Chairman and CEO of Alstom.

Italian firms are alive to the opportunities as well, with the signing of an agreement between Iranian minister of transport Mr Abbas Akhoundi and Italy's minister of infrastructure and transport Mr Graziano Delrio signing an MoU for Italian State Railways (FS) to become a development partner for Iranian Islamic Republic Railways (RAI).

And we couldn’t do a story about major rail business developments without mention of China. January 2016 saw Iran and China confirm a deal to electrify the 900km line between capital Tehran and Mashhad. The electrification will allow for faster trains, decreased energy use and a rise in the number of train passengers the service could transport a year.

This is by no means a comprehensive list of rail companies that have made the move into Iran. But with publically stated governments goals of investing $25bn over the next ten years in the modernisation and expansion of its creaking network, an expansion of the system from the current 15,000km to 25,000km by 2025 plus a need for $1.5 billion of annual investment in the next six years there will be no shortage of opportunities for rail business in Iran in coming years.

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Topics: projects

Luke Upton

Written by Luke Upton

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