Iran: Potential Transport Hub In Heart of Eurasia

Courtesy of Forbes, an interesting look at Iran’s efforts to capitalize on its potential to become a transport hub in the heart of Eurasia:

With most sanctions lifted, Iran is going all-in on its potential to become a transport hub in the heart of Eurasia, returning the country to its traditional position as a vital link between East and West.

However, Iran’s transportation dreams have a major problem in the current reality: decades of sanctions have left the country’s rail lines archaic and in disrepair. To fix this, Iran is devoting 1% of its oil and gas sales to rail development, amounting to a roughly $25 billion initiative to revitalize its existing rail network as well as add on 10,000 kilometers of new rail lines by 2025 — creating a yearly demand for roughly 8,000-10,000 new wagons in the process.

Iran’s rail ambitions are currently a shining beacon for rail engineering and rolling stock firms from all over the world, who are lined up at the gates of Tehran licking their chops in gleeful anticipation for the infrastructure building melee that is about to begin.

China

China was Iran’s economic lifeline during the period of heavy sanctions, and now Iran is a fundamental link in the country’s Belt and Road Initiative — a program of such importance to Beijing that it is now written into the Chinese constitution.

As part of a goal to boost China-Iran bilateral trade to US$600 billion per year within the next decade, China is doing some heavily living in Iran’s reinvigorating railway sector. In February, the first freight train from China arrived in Tehran, and a few months later China’s Export-Import Bank inked a $1.5 billion deal to provide funds to electrify the rail line from Tehran to Mashhad — along with promises to invest $9 billion in over two dozen other projects in array of other industries, including electricity, petrochemicals, metals, and oil and gas.

The Tehran to Mashhad line is one of the biggest developments in Iran’s emerging rail menagerie. This 926-kilometer railway is expected to be extended into a 3,200-kilometer New Silk Road behemoth, that will go all the way through Kazakhstan, Kyrgyzstan, Uzbekistan, and Turkmenistan to Urumqi, the capital of China’s Xinjiang province. This line is also slated to link in with Iran’s western railway network which leads to Turkey and Europe beyond.

Germany

A consortium of companies from Germany have already vouched $3.5 billion for rail development projects in Iran, which consist of a new signaling system for the Tehran-Tabriz railroad, new electric and diesel wagons, and high-speed connection lines.

Last October, Siemens signed two deals to supply 50 diesel-electric locomotives and 70 electric locomotives for the soon to be revitalized Tehran-Mashhad railway.

Italy

In July, Italy’s state rail company Ferrovie dello Stato signed a $1.37 billion deal with Iran to build a high-speed railway between the cities of Qom and Arak.

France

Not to be outdone by its European counterparts, France’s Alstom signed onto a joint venture to set up a factory to construct 1,000 railroad cars in Iran. While in 2015, the French architecture firm AREP committed to a $7 million project that would see them revitalize three Iranian railway stations.

Japan 

Never wanting to be left out of the Eurasian infrastructure game, Japan has signed deals with Iran to provide $10 billion in funding for railway related ventures, including two railroads to link together northern and southern Tehran.

Russia

As we previously reported, Transmashholding, Russia’s largest rail equipment manufacturer, recently signed a $2.5 billion deal with Iran to set up a joint venture to produce rolling stock for the country’s ever-growing rail network. While in 2015, Russian Railways signed a $1 billion deal to electrify and put up the signaling apparatus on a section of rail line between Garmsar and Gorgan.

Conclusion

Tehran’s rail ambitions have direct synergy with the development strategies of surrounding countries, as China’s Belt and Road Initiative, India and Russia’s North-South Transport Corridor, Kazakhstan’s Nurly Zhol, India and Japan’s Asia-Africa Growth Corridor, as well as Azerbaijan’s endeavors to build up its transportation economy to diversify away from reliance on oil and gas all overlap in Iran. By revolutionizing its railway sector, Iran essentially puts itself back on the map as the central hub of Eurasia.



This entry was posted on Wednesday, November 1st, 2017 at 4:21 am and is filed under Iran, New Silk Road.  You can follow any responses to this entry through the RSS 2.0 feed.  You can leave a response, or trackback from your own site. 

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Wildcats & Black Sheep is a personal interest blog dedicated to the identification and evaluation of maverick investment opportunities arising in frontier - and, what some may consider to be, “rogue” or “black sheep” - markets around the world.

Focusing primarily on The New Seven Sisters - the largely state owned petroleum companies from the emerging world that have become key players in the oil & gas industry as identified by Carola Hoyos, Chief Energy Correspondent for The Financial Times - but spanning other nascent opportunities around the globe that may hold potential in the years ahead, Wildcats & Black Sheep is a place for the adventurous to contemplate & evaluate the emerging markets of tomorrow.