Tehran Urban & Suburban Railways Company (TUSRC), Tehran municipality and the city council are all involved in the project, but contractors say they are not in agreement over how to finance the project. Bidders have been asked to provide their own finance for the supply portion of the scheme, up to $200 million.

Despite the delay, the projects are unlikely to be retendered, with TUSRC more likely to pursue direct negotiations with each of the current bidders. Contractors say this approach will be more effective because the complex scope of works makes a direct comparison of prices extremely difficult.

Commercial bids were due to be opened in May for the lump-sum turnkey (LSTK) contracts for the two lines, but TUSRC asked bidders for new proposals on manufacturing rolling stock locally. The contractors are expected to be asked to form majority Iranian-owned joint stock companies to build some 700 wagons over a 10-year period. Some 200 of these will be needed in the first five years, with the first 20-50 wagons expected to be built abroad and all subsequent units in Iran.

However, there may be difficulties in the scheduling. The only company in Iran with the existing facilities to manufacture suitable wagons is WagonPars, a subsidiary of state-owned Industrial Development Renovation Organisation (IDRO). But its books are already full for the next few years. Instead, an entirely new manufacturing line may have to be built, either with IDRO or possibly the Ministry of Defence, but this process would also take several years. Contractors say it could eventually lead to the development of a national rail construction and associated industries company.

Six groups have bid for the two projects: IDROand General Mechanic, both local, and a South Korean consortium led by Daelim Industrial Companyand including LG Engineering & Construction, Hyundai Engineering & Construction Companyand Daewoo Corporationsubmitted bids for both lines. China's CTICbid only for line 3 while Germany's Siemensand China North Industries Corporation (Norinco) bid only for line 4.

The 20-kilometre line 3 is technically straightforward, running along the city's flat east-west axis under Azadi Avenue and Enghelab Avenue. However, the 40-kilometre line 4 will prove more difficult. It runs from north to south at a steep gradient through geologically complex ground formations. There may also be a problem with drainage at the southern end of the line, which is downhill of the northern end.

Lines 1, 2 and 5 are in operation, with extensions already being carried out by the Chinese groups. Some bidders have suggested the extent of work already on the Chinese companies' books could diminish their prospects for lines 3 and 4. The next round of lines, 6-8, are due for completion within 15 years.