21 Dec, 2015

Huge future for Iran’s railroad projects

======

TEHRAN, Dec 18, (NNN-IRNA) – Following the nuclear deal struck between Iran and world powers on July 14 this year, it is widely expected that sanctions imposed by the UN Security Council will be lifted sometime in January.

Once this happens, Iran will be free to start doing business with the many national delegations that have been arriving in Tehran over the past six months for sales presentations, and it will be able to pay with the million extra barrels of oil a day it will sell on world markets, reported Global Construction Review.

The review is published by the Chartered Institute of Building, a UK-based body that represents construction management professionals who work within the built environment.

A high priority for Iran is the creation of a genuinely national rail network. At present, Iran has just less than 13,000 km of track. This is 4,500 km fewer than in the UK, a country with about the same number of people living on a patch of Earth seven times smaller.

Iran’s major cities are separated by hostile deserts and high mountains. Long-distance travel by road is exhausting and dangerous (there are seven times more road deaths in Iran than in the UK) and although air transport is expanding rapidly, it cannot rely solely on planes to meet domestic demand for intercity freight and passenger travel.

The railroad system consists of largely unelectrified, single-track lines centered on Tehran that miss out large cities such as Hamedan (population: 500,000), and require slow, circuitous journeys to travel between neighboring cities such as Shiraz and Bandar Imam Khomeini. This means that only about 11% of the people who travel in Iran do so by train.

The government is planning a major expansion. Mohsen Pourseyyed-Aqaei, the director of the Islamic Republic of Iran Railways, said in October that the IRIR had identified $25 billion worth of rail projects, plus “incentive packages” to attract domestic and foreign investment.

Based on Iran’s Vision Plan, by 2025, existing lines are to be electrified and double-tracked, and about 12,000 km of new lines are planned, nearly doubling the size of the network.

Some groundwork has already been done. Twenty years ago, the sparsely-populated southeast of the country had scarcely any rail lines. But Iran needed to move containers north from its Persian Gulf ports, and so it completed the link between Bandar Abbas and Bafq in 1995.

With that link and the 2009 connection between Isfahan (population 1.7 million) and Shiraz (population 1.5 million), the country achieved the skeleton of a national service. The drive now is to put some flesh on the bones.

As well as getting its own people and goods moving, Iran is eager to come into its own as a great hinge linking Europe, Asia and Africa. Making Iran a giant crossroads are two grand trade routes envisaged between the Pacific, Indian and Atlantic oceans. One is the International North-South Transport Corridor and the other is China-to-Europe Silk Road.

The idea behind the INSTC is that containerized goods will travel from the Port of Mumbai to Iran’s Persian Gulf coast–bypassing Pakistan–from where they will be able to reach Moscow and Europe in half the time taken by the Suez Canal.

As well as saving time, the route has been estimated to save $2,500 for every 15 tons of cargo.

Iran, Russia and India signed a convention initiating the INSTC way back in 2000, but progress has stalled. Indian exporters are very keen, which is why one leading Indian newspaper greeted the 14 July deal with jubilation.

The other axis of the crossroads is China’s Silk Road, arguably the infrastructure project with the highest priority of all in Beijing.

A high-speed standard gauge line running through Central Asia would slice through a knot of broad gauge lines in the states of the former Soviet Union and speed up the flow of goods to Europe, compared to sailing round the long way.

So, the stakes riding on the Iran’s rail schemes are high, both for the Iranian economy and for the whole of Asia as it reconfigures itself for the 21st century. Here are seven of the most significant schemes that are underway now, or that will shortly go ahead.

Tehran to Central Asia

An early win in Iran’s rail revolution will be the boosting of the historical line from Tehran’s northeast to Turkmenistan, facilitating the flow of goods, particularly grain and oil, between the former Soviet Republics bordering the Caspian Sea (Turkmenistan and Kazakhstan) and the Persian Gulf. Russia is a key player in this upgrade.

On 23 November, the IRIR and Russia Railways’ subsidiary RZD signed an agreement worth $1.3 billion to electrify the 495-km section of railroad between Garmsar, on Tehran’s outskirts, and the village of Incheh Borun on the country’s northeastern border with Turkmenistan.

The old line is actually part of Iran’s first great national railroad, the Trans-Iranian, built between 1927 and 1938, but it needs modernizing.

The 36-month contract will involve building power stations and overhead lines, 32 new train stations and widening 95 tunnels to accommodate the stouter rolling stock used on the Soviet system.

The IRIR’s Pourseyyed-Aqaei said the aim was to increase the capacity of the line to 8 million tons of goods a year.

The project will be financed by the Russian government out of a $5 billion export credit line. Iran insisted that all electric locomotives for the deal had to be made in Iran, allowing Iran’s manufacturers to absorb new skills and technology.

An interesting side effect is that it will turn the sleepy village of Incheh Burun (population 1,764; reached by railroad in 2013) into a key node in a major Eurasian arterial route.

Kazakh President Nursultan Nazarbayev expects the new line to boost rail traffic involving Iran, Turkmenistan and his country from 3 to 20 million tons a year by 2020, The Railway Gazette reports.

Kazakhstan’s rail links with China would make this route one of several strands in China’s “Silk Road high-speed railroad”–standard-gauge links between China, Central Asia, Iran and Europe.

All the Way to China

While Russian money is paying for a modern high-speed Turkmenistan link, the Chinese are about to begin electrifying the line that runs roughly parallel to it: the 1,000-km double-tracked route between Tehran and Mashhad.

In June, Iranian and Chinese officials finalized an agreement to electrify this line, with 85% of the $2.1 billion cost to be financed through Chinese loans.

Completion of this work is expected to take 42 months, followed by a five-year maintenance period. It will be carried out by Iranian infrastructure engineer MAPNA Group and China’s CMC and SU Power.

When this line is fully modernized, 70 Chinese locomotives will zoom along it at 250 km/h. Together with improved track and signals, this is expected to cut the journey between Tehran and Mashhad from about 12 hours to six, and increase freight capacity to 10 million tons a year.

Along with the Incheh Borun route, this will be another strand of China’s Silk Road. The proposal was put forward by He Huawu, the chief engineer of China Railway Corporation.

His route runs from Urumqi in western China, through Kazakhstan and Uzbekistan, hitting Ashgabat in Turkmenistan before crossing south into Iran and down to Mashhad.

From there it would join Iran’s east-west network leading to Turkey and eastern Europe.

Huawu said container trains and passenger trains could run on the same route. The only difference would be speed. A passenger train could run at 250-300 km/h, whereas a container train could run at 120 km/h.

Iran to Moscow

Key to the International North-South Transport Corridor is a railroad running from Russia down through Azerbaijan, through Iran to the Persian Gulf, facilitating trade linking Russia’s populous east, India and Southeast Asia via the Indian Ocean.

The new link is required because the old Soviet railroad passed from Azerbaijan and Armenia, and those two countries are engaged in one of the region’s frozen conflicts: the line has been closed for more than 20 years.

In May this year, the rail heads of Iran, Russia and Azerbaijan agreed that Russia would build the rail line from Rasht on Iran’s Caspian coast to Astara in Azerbaijan.

The Rasht route will branch off Iran’s main northwest line at Qazvin, pass across the mountains to the Caspian coast to Astara, thereby reconnecting western Europe to Southeast Asia for the benefit of India, Russia and the other signatories to INSTC. The plan is to open it next year, after which Astara will be turned into a special economic zone.

What is not so clear is the future of Iran’s proposed $3.2 billion link with Armenia. This is a high priority for Armenia, of course, but not, it seems, for Russia.

Vladimir Yakunin, the chief executive of Russian Railways, said in June 2015 that the project would not be “like opening a window to nowhere, to the wall of a neighboring building”.

Armenian officials had hoped that Russian investment would be forthcoming, but following Yakunin’s remarks Armenia is also in talks with China over funding.

The High-Speed Showpiece

The rail linking Tehran, Qom and Isfahan is going to be the showpiece of the entire network: a modern double-tracked line running at 400 km/h–the only genuinely high-speed project presently underway.

Work on the $2.7 billion scheme began in February 2015, undertaken by the China Railway Engineering Corporation and Iran’s Khatam Al-Anbia Construction. Completion is scheduled for 2019.

A considerable part of the work will involve building or rebuilding stations, and some of this has been won by Arep, the multidisciplinary design arm of French state-owned rail operator SNCF.

It will rebuild stations in Tehran and Qom as modern multimodal transport hubs, and do the same for Mashhad on the northeastern line.

Etienne Tricaud, the head of Arep’s board of directors, said in July: “Tehran’s railroad station is 80 years old now, and it is not compatible with present-day needs. We have to present a comprehensive plan for 170 hectares of land at this station so that high-speed inner-city and suburban trains, as well as electric and metro trains, can transport passengers in the city center.”

Iran’s Bank of Industry and Mine will provide $1.8 billion of the finance for the work, underwritten by the China Export and Credit Insurance Corporation.

Meanwhile, reports in the Iranian press in May 2015 that a British private company had agreed to build a railroad from Isfahan to meet the Qom–Kermanshah line at Arak have died away.

According to Mohammad Ebrahim Rezaei, who represented the central city of Khomein in the Iranian Parliament, the Iranian Ministry of Roads and Urban Development had already given the go-ahead to the mystery investor and it was to have been the first privately built railroad in Iranian history.

Basra, at Last

In June 2015, Iran began laying the first-ever track between Khorramshahr and Basra in Iraq, thereby creating an eventual junction between the Silk Road and the regional rail system being built by Arab countries. It will require 12 km of track on the Iranian side of the border, a 700-meter-long bridge over the Arvand River and a 32-km stretch on the Iraqi side.

According to Iranian officials, the integration of the railroads will take place in the next 20 months. Currently, as many as 20,000 Iranians use the Shalamcheh border crossing daily to travel to Iraq, a figure that rises to 50,000 during Shia religious anniversaries, when Iranian Shias travel to Karbala, Najaf and Baghdad.

Abbas Akhoundi, Iran’s minister of roads and urban development, commented: “With the operation of this railroad, we hope transportation will improve for the travelers. It will also connect us to the eastern Mediterranean nations and lead to a transformational change in the transit of goods and passengers.”

The Eastern Corridor

Chabahar is Iran’s southernmost city and also its best access to the Indian Ocean. It is also at one end of the so-called “Iran’s Eastern Corridor” connecting Chabahar to Central Asia, the Caspian and the Caucasus.

In much the same way as Russia felt compelled to hurry Iran along at Rasht, India is taking a hand in the expansion of Chabahar Port and is also lending finance and advice to the construction of the railroad. The aim is to sidestep Pakistan and compete with the new Chinese-built port a few miles along the coast at Gwadar in Pakistan.

It has been calculated that freight moving by rail from Chabahar or Bandar Abbas takes 30 days to travel by rail to Bandar Anzali on the Caspian Sea, move by ship to the Kazakh rail system and reach St Petersburg, compared with 45-60 days on the Suez route.

Tehran has suggested that the Indians lend a hand with the 500-km stretch between Chabahar and the line between Ban and Zahedan, which is located by the borders of Iran, Pakistan and Afghanistan.

This would tie Chabahar in with the main Iranian rail system and give Indian exporters access to the distant markets beyond Azerbaijan and Turkmenistan.

Negotiations over the terms of this deal have been bumpy, according to reports in the Indian press, with Delhi concerned that if it were to take an equity state in the link, a future Iranian government may expropriate it. The Iranians have responded with soothing words.

The $3 Trillion Prize

The possibility of building a railroad to Herat in western Afghanistan has been proposed and abandoned at regular intervals for the past hundred years or so, mostly by officials of the British and Russian empires.

The Iranian plan now is to build a branch to Herat from the line being built between Chabahar and Torbat-e Heydarieh. The work for this scheme is underway and the line now stands about halfway to the border.

Ashraf Ghani Ahmadzai, the president of Afghanistan, has reportedly expressed his support for a plan to continue the line on the Afghan side of the border and the local officials have lobbied in favor of it.

Iran is reportedly willing to pay for the link to Herat and has begun planning for an extension to Mazar-i-Sharif in the north of the country, which is the only substantial city with a rail service (it goes north to Uzbekistan).

The possibility of a railroad in Afghanistan, which is on the direct route between Iran and China, would be an essential step to the economic recovery of the country, if only to enable a start to be made on mining the country’s vast mineral wealth.

A line to Herat would enable the exploitation of Hajigak region, which contains Asia’s largest deposit of iron ore–one estimate puts its value at $3 trillion–and access to it is an acknowledged motive for India’s willingness to finance the Chabahar railroad.

Given the prizes on offer, it is not surprising that Iran and India are pressing ahead with the line. However, the difficulties of operating in Afghanistan in its present state of disorder are obvious: It has been called the ‘world’s most dangerous railroad’.

When sanctions against Iran are dropped early next year, the country will be hard pressed to cope with the consequences of its success.

The expectation among those countries and construction companies looking to do business with Tehran is that there will be a long infrastructure and construction boom that will address equally urgent needs to expand its downstream oil and gas industries, tackle the serious housing shortage, modernize the health and education systems, and expand its power system sufficiently to cope with the inevitable increases in demand.

Just as important as these priorities is the expansion and modernization of the rail system, not least because of the amount of investment that it will attract from neighboring states that also have something to gain from a first-class system.

Iran has been transformed into the country that none of the others in the wider region can do without.