Tehran is to invest $1.2bn on revamping the republic’s ports this year, according to one senior Iranian industry official, and is planning a rail link between the nation’s north and south coasts to create a trade corridor.

Despite the economic downturn, Tehran is pushing ahead with plans to upgrade capacity and services at the country’s major ports. However, the reluctance of foreign investors to finance schemes in Iran means the government is likely to fund the developments itself.

More than $400m has been earmarked to continue the expansion of Chabahar port on the Gulf of Oman, and close to $600m will be used to fund the development of a container facility at the Gulf port of Shahid Rajaie at Bandar Abbas, according to Mohammed Ali Hassanzadeh, head of the investment office at the country’s Ports & Maritime Organisation.

In addition to this, Iran’s ports on the Caspian Sea are to receive $200m in investment as the government seeks to establish the country as a trade hub serving southern Russia and other members of the Commonwealth of Independent States (CIS), the rest of the Gulf region and the Indian subcontinent.

The Transport Ministry will begin drawing up a masterplan for establishing a rail link between the Caspian Sea and Gulf coasts via Tehran. The proposed route would run from Nowshahr on the northern coast, via the capital, to Shahid Rajaie on the Gulf, with a possible spur line running to Chabahar.

Key facts

Iran’s port authorities say the land corridor would save almost two weeks on the typical journey time for cargo travelling between Russia and the Gulf region, compared with the time it takes to ship goods from southern Russia via the Black Sea, Mediterranean Sea, Suez Canal and Red Sea.

“We calculate that it would save a ship 13 days,” says Hassanzadeh, speaking on the fringes of MEED’s Middle East Ports Development 2009 conference in Dubai on 1 February. “For countries around the Caspian Sea, a rail route through Iran is the best solution for trade.

“This transit route can establish Iran as a transhipment hub for the Caspian Sea and the CIS.”

Although rail lines already exist along much of the proposed route, the line will need to be upgraded at significant cost if it is to be capable of carrying large volumes of freight rapidly from coast to coast.

The absence of large-scale foreign investment, coupled with the country’s deepening financial difficulties, is likely to make this difficult. Already, several rail projects in the country have had to be delayed because of a lack of finance.

In January, MEED revealed that Iran’s plans to build two high-speed lines, from the capital to Esfahan and Mashhad, had been shelved until 2010 at the earliest, because of the difficulty in raising finance. Instead, it is concentrating on renovating existing stretches of track.

In October 2008, Iran held talks with India to discuss improving co-operation between the shipping and ports sectors in the two countries, and developing the trade route from India to Russia using Iranian ports and rail links.

Consequently, Shahid Rajaie port is now to be partnered with Jawaharlal Nehru port on India’s west coast.

Iran imports $1.5bn worth of goods from India each year, and exports $150m worth of its goods to the country, with most of this travelling by sea.

On 1 February, Iran opened a new privately financed commercial port at Aftab on the Gulf coast.