Monetary and Capital Market Exclusive, March 2004

Monetary and Capital Market in Iran

980 passenger wagons and 300 locomotives will find their way to the Iranian rail transport by 2007 

Dr. M. Pour Seyed Aqaei, Managing Director of Raja Passenger Trains Co.

The rail transport system has always been a matter of great significance for policymakers in developed and developing countries due to its inherent advantages (relative and absolute) among them: a high rate of goods and passenger transport, low environment pollution rate, low energy consumption rate, and high safety coefficient.

This is why Raja Passenger Trains Company was established in 1996 as a totally state-run enterprise 100% of whose stocks belonged to the Islamic Republic of Iran Railroads. The company’s goal is the quantitative and qualitative upgrading of passenger transport services and its policy includes better use of facilities, increasing efficiency and providing better services to develop overall rail services. Continuation of this policy in line with the government’s development policies has had remarkable consequences.

Expansion of rail transport took center stage in the Third Five-Year Development Plan and provided Iran with easy access to the densely-populated areas of neighboring countries and Central Asia. Among the projects already operational are Mashhad-Bafq railroad project which shortened the distance between Iranian and Central Asian ports by 1000 km. Kerman-Zahedan rail link was another important project, which connected Iran and European countries to the Indian Subcontinent. Iranian railroads can now meet only 25% of demands in the rail transport sector and this in turn necessitates shaking any helping hand from other countries, friendly nations in particular.

Simorgh, Sabz (Green) and Delijan train services have been launched in cooperation with the private sector, the contract for launching the first private Tehran-Kerman train was signed with Joupar Company. Raja Passenger Trains Company was to receive 50 wagons from Pars Wagon Company during the current year and 150 double-decker wagons have been purchased from abroad that will be delivered according to an agreement between Iranian and Chinese banks. Based on projections, Raja will be transporting 36 million passengers by 2010.

Presently 300 ticket sales agencies are operating using the Online System. The system launched by local specialists has saved the company some 11 billion rials

Bolstering Fleet: The low number of fleet—most of which are past the operational age—has been a problem for the passenger transport section; as it has been faced with rising demand. The fleet capacity has increased and its average operational age has decreased during recent years by purchasing more wagons from inside and outside the country, purchasing railbuses and train sets as well as renovation and refurbishment of wagons.

There has been an agreement for the purchase of 40 three-car railbuses from Iran Khodro Company which would increase the number of passengers from 9.5 million four years ago to 16 million today (see Table 1). 980 passenger wagons and 300 locomotives will find their way to the Iranian rail transport by 2007. This will push up the railway’s share of national transportation to 20%. According to projections passenger transport will increase to 11 billion persons per km from the current 7 billion in five years’ time.

Launching International Trains: In line with strengthening Iran’s relations with neighboring countries, Raja Passenger Trains Company has inaugurated Tehran-Istanbul, Tabriz-Van as well as Tehran-Damascus international passenger services since 2000 in cooperation with Turkey and Syria. Tehran-Tashkent-Almaty train service will also become operational in the near future. Meanwhile, Tabriz-Nakhichevan and Zahedan-Quetta international trains are working in cooperation with railroads of Azerbaijan and Pakistan.

Promotion of Ticket Sales: In line with a policy to upgrade the quality of ticket sales and make tickets available to all Iranians, the company has organized a computer-based ticket sales system and established agencies in different cities throughout the country. The latter in turn is one of the most important achievements of the company.

The system has been in effect since 1997 and developed rapidly. Presently 300 ticket sales agencies are selling train tickets using the Online System. The system launched by local specialists has saved the company some 11 billion rials bringing about an added value of 70 billion rials. The system has facilitated the access of all Iranian citizens to tickets. Also on offer now are one-month advance sales of tickets, ticket sales through telephone contacts, canceling and getting refunded at all agencies, etc.

Information: In addition to Internet sites (www.rajatrains.com), the company has taken steps to launch an information system. The system is equipped with an answering phone line, an information system at the railway stations, a voice-recording system for those who wish to talk to the Managing Director, Intranet, etc. The system provides people with the latest information on ticket prices, sales agencies, etc.

Technical and Repair Activities: Each year a number of coaches are overhauled to promote the quality of services on offer. Also a number of second-class coaches are transformed to first-class and sleeping cars. Statistics say during the past 22 years some 2,000 coaches have undergone overhauls and more than 15,000 annual repairs. Such repairs have accounted for a drastic decrease in car defects although the fleet is aging and runs better than it did before. Among other activities of Raja Company are manufacturing steam generating wagons for the first time in Iran, designing and manufacturing car-carrying wagon, baby dressing table, two-sided seats and executing more than 300 projects in relation to coach designing and manufacturing.

Onboard Facilities: One of the most important objectives of Raja Company in recent years has been to secure customer satisfaction. In addition, Raja has decided to pay penalties for delays and any deficiencies in services. It has approved some regulations in this regard and is bent to secure passenger satisfaction. Half the fare is refunded in case of excess delay, derailment, defective air conditioning system, and failure to catch the train. Another special offer is sending a passenger who has missed a train onboard a next train.

Privatization: In line with overall policies of the Islamic Republic of Iran to secure public participation and downsize the government Raja has handed over a large part of its workings to the private sector.

The most important measures taken in this regard are:

• Handing over about 75% of trains

• Launching Sabz and Simorgh special trains in which the private sector has invested

• Concluding a number of contracts to establish new rail links

• Operating, repairing and maintaining all mail and luggage wagons

• Selling tickets through about 300 private agencies

• Establishing trade stands at stations

• Running advertisements and publishing articles

• Taking care of internal decorations for coaches

• Backing up an online system software and other systems

• Repairing and maintaining the power and air conditioning systems of coaches

• Manufacturing parts and equipment of coaches

• Running technical workshops to take care of painting, carpentry, compressor, gear box, diesel engines, etc.

• Rendering services such as cleaning, draining, washing bedclothes, etc.

• Concluding contracts to purchase two passenger trains for Isfahan-Bandar Abbas line and vice versa

• Following up the financial facilities received by investors by virtue of Note 11 of the Budget Law

• Establishing a joint committee for technical and economic assessment of fuel conservation through developing a fleet in cooperation with the State Energy Consumption Optimization Organization

Future Plans and Projects:

• Purchasing 200 passenger wagons from Pars Wagon Company;

• Purchasing 138 first-rate and modern passenger wagons and 12 restaurant wagons from abroad;

• Purchasing 25 electricity generators from abroad;

• Purchasing 30 passenger locomotives from abroad;

• Follow-up for purchasing 60 train sets by the Islamic Republic of Iran Railroads;

• Developing local trains by purchasing 30 railbuses;

• Basic repairs on 500 passenger wagons, 350 service wagons and 50 steam generating wagons;

• Constructing new wagon houses in Tehran and other cities for maintenance and repair of passenger wagons and improvement of workshops in Tehran, Mashhad and Ahvaz;

• Developing parts design and manufacture programs for passenger wagons inside the country;

• Development, optimization and equipment of stations with escalators, elevators, x-ray and so on;

• Increasing speed of trains to over 160 km/h;

• Inaugurating Tehran-Isfahan express trains at a speed of 250 km/h            

Table 1: Third Five Year Development Plan