Iranians and South Korean companies signed a contract worth €720 million to jointly build 450 rail carriages for use in suburban Tehran, an official said.
Hyundai Rotem, a South Korean manufacturer of rolling stock, signed the agreement with the Iranian Rail Industries Development Co (IRICO) in Tehran on Saturday, deputy head of the Islamic Republic of Iran Railways Babak Ahmadi was quoted as saying by Press TV.
Two-thirds of the carriages will be manufactured in Iran and the rest in South Korea which will also provide finance, Deputy Minister of Roads and Urban Development Saeed Mohammadzadeh said.
“The duration of the project is 78 months, and the first set of the carriages will be delivered in less than 1.5 years,” he said.
South Korea’s Eximbank signed a contract with Iranian banks in August to provide €8 billion ($9.4 billion) in loans for financing various projects by South Korean companies in Iran.
Mohammadzadeh said the contract also includes transfer of technology, enabling the state-owned Iranian company to manufacture rail carriages under license.
Tehran and other major Iranian cities are aggressively developing a mass-transit system in which metro transportation plays a vital role.
In July, French transport company Alstom signed a joint agreement for the construction of metro and suburban railroad cars in Iran.
Much of Iran’s transportation is road-based marked by high accident and casualty rates. Mohammadzadeh said with the completion of the new project, 70 million seats will be added to Iran’s rail fleet a year.
The Iranian government has placed the expansion of Iran’s rail network on top of its agenda to facilitate transportation, conserve hydrocarbon fuel and reduce air pollution and road traffic.
Iran’s Sixth Five-Year Development Plan (2017-22) has tasked the government with increasing the share of rail in cargo and passenger transportation from the current 12 percent and 8 percent to a minimum of 30 percent and 20 percent respectively by the end of the plan.
To arrive at this goal, Abbas Akhoundi, the Roads and Urban Development Minister has said that some $28 billion worth of investment is needed.
Cheap fuel prices in Iran, costing less than 10 percent of the global average, are the main reason for the popularity of road transportation in Iran.
Around 1.7 billion road trips are made in Iran annually, 700,000 of which pertain to suburban transportation.
In August, IDRO signed a €2.5 billion contract with Russia’s CJSC Transmashholding in Tehran for joint production of rolling stock in Iran.
Based on this contract a joint venture will be formed between IDRO and the Russian company with the Russian side holding an 80 percent stake and the Iranian side a 20 percent. Transmashholding CEO Kirill V. Lipa told said the signing of the contract that the capacity of the joint venture will depend on the depth of localization. “For assembling, we’re thinking about 300-400 units per year.”