Iran's railways to undergo major upgrade

19 December 2010

Iran has set out ambitious plans to develop its railway and metro networks. But if the massive expansion is to succeed, the government needs to put an end to political differences and make funding available

Iran in numbers

25,000km: Length of railway track by 2015

82 million: Predicted number of passengers using Iran’s railway system in five years’ time

$10bn: Funding needed to complete lines 3, 4, 6 and 7 of the Tehran metro

Source: MEED

Tehran has drawn up an ambitious blueprint of how it wants its railway network to look in 20 years’ time. Its existing railways are dilapidated, inefficient and in major need of upgrade to cope with the demands of a rapidly growing population.

Iran has the [chance] to position itself at the centre of a trade corridor straddling Russia, Europe, the Gulf and the subcontinent

Although Iran is keen to modernise and expand its entire transport infrastructure, including its ports and airports, it is the railway sector that will make the most difference.

In 2010, Iran’s rail system carried some 19.5 million passengers, and the aim is to increase this by 320 per cent in just five years to 82 million passengers, according to a Tehran-based analyst. The existing 9,000 kilometres of railway currently in use is expected to be extended to 25,000km by 2015. About 4,000km of track is already under construction in various parts of the country.

Iran has plans to build a further 16,000km of network by 2030. However, the likelihood of these plans being implemented on time will depend on whether the government is able to secure the necessary financing and on the political situation in the country.

Trade bridge from Iran

The most ambitious of the planned railway schemes is the $400m North-South railway project, which comprises the construction of a line from Azerbaijan to the north of Iran through to the south of the country. The railway is intended to serve as a trade bridge, connecting Russia, Europe, the Gulf and the Indian sub-continent through Iran. The first phase of the scheme involves building a railway line between Qazvin, in the west of Iran, to the city of Rasht in the north. Under construction by contractor Russian Railways, this section of the project is about 40 per cent complete.

By the end of 2011, Iran hopes to have connected Rasht with Astara in Azerbaijan. However, this will require Baku to complete work on its own railway network, which is also severely dilapidated.

Another major international rail project is being planned to link the eastern part of Iran to the western region of Afghanistan to help facilitate the transfer of goods and cargo between the two countries. Iran is also in talks to develop a $2bn railway project linking the western provinces with Iraq and the Syrian port city of Lazeqiah on the Mediterranean. The Asian Development Bank is working on initial feasibility studies for a railway line to connect Iran with Afghanistan and Tajikistan that will also be focused on the transportation of cargo. This plan is in the early stages of development and will depend on co-operation and funding from regional governments.

Another international project is planned to link Iran and Armenia to the Black Sea. A study for the $2bn 540km railway is being carried out by Washington-based World Bank, with the construction contract tentatively due to be awarded in 2012. Germany-based ILF Consultant Engineers undertook the pre-feasibility study for this project.

Strategic rail links

Construction of another strategically important rail link between the Iraqi port of Basra and Imam Khomeini port, in the south of Iran, is already under way. The first phase of the line will run for 30km from Basra to the city of Khorramshahr. This is expected to be finished in 2011. The second phase will extend the railway a further 80km to Imam Khomeini port, but a timeframe for this has still to be decided on.

Iran also has several internal railways that are progressing. The local Barsan and Russian Railways are carrying out the $8.5bn electrification of the Tehran-Mashhad railway. The line will have an ultimate speed of 500km an hour and is expected to be finished in 2012.

Further contracts are due to be awarded next year for the reconstruction of 60km of track in Lorestan province and the construction of 200km of track in Hormozgan province, with an expected completion date of 2014. Another project due to be awarded in January 2011 is the estimated $1bn Persian-Gulf bridge, being planned by the Qeshm Free Zone Authority (QFZA). The bridge will span 2.4km, linking Qeshm island in the Gulf to mainland Iran. QFZA is aiming to transform the island into a trade hub due to its proximity not only to the mainland, but to the ports in the UAE and Qatar.

A $2.3bn railway project is also planned to run 1,100km along the majority of Iran’s eastern border, from the southern port city of Chabahar to Mashhad in the north. China Railway Engineering Company is tipped to win the construction contract, with completion expected towards the end of 2015.

A further project is planned for Esfahan in the centre of Iran. The local municipality hopes to build an electric railway network to serve the city – the second largest in the country. Preliminary studies are expected to take about one year to carry out.

Iran’s metro network

Aside from the national and cross-border rail schemes, the most visible symbol of Iran’s ambitious plans are its metro developments. There are nine metro projects, worth $50bn, under way that will run 1,000km when complete.

Tehran Urban & Suburban Railway Company (TUSRC) is working on metro projects in Tehran, Qom, Esfahan, Mashhad, Shiraz, Ahvaz, Karaj, Kermanshah and Tabriz. The existing metro network in Mashhad has only one line just 19km long. A second line is under construction and will run 60km when complete in 2030. Esfahan’s metro network will span 112km and the Shiraz metro will stretch 50km. Karaj and Ahvaz will both have 60km of track, and Tabriz will have a 44km network.

Tehran metro lines
Line numberLengthStatus
335kmUnder construction
420kmUnder construction
5 (Express line)42kmComplete
630kmUnder construction
727kmUnder construction
Express line 1tbcPlanned
Express line 2tbcPlanned
Express line 3tbcPlanned
Express line 4tbcPlanned
tbc=To be confirmed. Source: Tehran Urban & Suburban Railway Company

The biggest metro plans are being implemented in Tehran to meet the needs of its rising population. By 2030, Tehran and its satellite cities are forecast to be home to 20 million people, up from 12 million today. Analysts predict daily metro users will reach 10 million – a 10-fold leap from the 1 million who use it today.

Lines 1 and 2 of the Tehran metro have been operational since 1999, when the first express route, the 42km line 5 to the satellite city of Karaj, to the west of Tehran, was also opened. The TUSRC plans to build two more routes, lines 8 and 9, and a further four express lines running to other outlying cities. Line 1 is due to be extended 8km to the north and line 2 will be extended 7km to the east by 2013.

However, Mohsen Hashemi, head of TUSRC, says there are “no long-term finances [in place] due to the international sanctions” so these plans have been temporarily shelved.

The rail company is having trouble raising the $10bn it needs to complete the four urban lines, 3, 4, 6 and 7, that are currently under construction and due to be complete in 2018. The TUSRC is meant to foot half of the bill, with the Tehran Municipality providing the remainder. But international sanctions on the country’s banking sector are making financing difficult to secure.

The TUSRC is exploring ways around the financing issue and one option being tested is carrying out the construction of some of the passenger stations on a public-private partnership (PPP) basis, says Hashemi. The TUSRC gives the plans for the station to a private investor, while the municipality provides the land and permits to build. The government then offers the private investor a loan to help fund the construction. Some $1.4bn of PPP development is already under way for 16 stations.

According to the TUSRC’s 2030 metro plan, Tehran’s metro network will comprise four express lines, eight urban lines and five tram lines. There will be 256 passenger stations and a total of 15 million passengers a day will use the network. To build the express lines and additional urban lines, the TUSRC will need to find a further $18.5bn in funding.

Political hurdles

Iran began planning for a comprehensive rail network in 1978, but the revolution the following year meant projects were heavily delayed. Later, it was funding issues that stalled progress.

Politics are a further obstacle to the programme. In 2009, President Mahmoud Ahmedinejad said he would return control of the metro to the government, taking it out of the hands of the TUSRC in a politically motivated move. The company’s head, Mohsen Hashemi, is the eldest son of Akbar Hashemi Rafsanjani, a former president of Iran and a vocal supporter of Ahmedinejad’s reformist election rival Mir Hossein Mousavi. Although nothing has yet come of this, it is creating uncertainty in the TUSRC and has also meant the government is not willing to provide any further funding to the metro projects.

To implement the ambitious plans to develop its railways and build new metros, Tehran needs to set aside internal political differences and make the necessary funding available. If it can do so, then Iran has the opportunity to position itself at the centre of a trade corridor straddling Russia, Europe, the Gulf and the subcontinent.

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications