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September 2017, No. 85


Global Economy

Alstom Signs Deal to Build Railroad Cars in Iran


According to Nematzadeh, Alstom will hold 60 percent of the project, while each of the Iranian companies will invest 20 percent. The minister did not give the value of the deal.


High-ranking officials from Iran’s rail industry signed a major deal with the French rail car manufacturer Alstom to produce subway cars.

The agreement was signed in a ceremony in Tehran attended by Iran’s Minister of Industry, Mines and Trade Mohammadreza Nematzadeh.

Officials from Alstom — a multinational company operating worldwide in rail transport markets — the Industrial Development and Renovation Organization of Iran (IDRO) and Iranian Rail Industries Development Company (IRICO) inked the trilateral agreement (July 25).

Speaking at the ceremony, Nematzadeh pointed out that the Iranian rail transport industry has had a minor share in the country’s development, and called for efforts to develop the industry.

Referring to subway projects in seven metropolises nationwide, he noted that manufacturing subway cars is one of the primary requirements for the projects.

According to Nematzadeh, Alstom will hold 60 percent of the project, while each of the Iranian companies will invest 20 percent. The minister did not give the value of the deal.

The aim of the partnership is to develop a railroad car construction factory in the city of Abhar, 227 km to the west of Iran, where 1,000 wagon units are anticipated to be built, he said.

Iran itself has a sizable capacity for construction of railroad cars. It can produce five passenger train coaches and 3,000 freight wagons as well as 50-60 locomotives a year.

“Given the Alstom’s major share in this contract, we also demand export of wagons, in addition to domestic supply,” Nematzadeh said.

“According to the agreement, the latest technology in the world will be coming to the country and in the first part of the cooperation, 2,000 metro rail carriages will be provided,” he added.

Nematzadeh said a team of representatives from German engineering giant Siemens was scheduled to visit Tehran later for talks on investment and transfer of technology.

Deputy Head of IRICO Majid Talachian referred to the Alstom agreement and said that a similar deal will be signed with Siemens.

He said two other companies will be involved in cooperation with Siemens but he declined to give further details.


“According to the agreement, the latest technology in the world will be coming to the country and in the first part of the cooperation, 2,000 metro rail carriages will be provided,” Nematzadeh added.


Siemens has perhaps been one of the most proactive German firms in pursuit of opportunities in Iran after January 2016 when Tehran and the world powers implemented a deal they had reached earlier to resolve a long-standing dispute over Iran’s nuclear program.

Siemens has been cooperating with Iran’s major industrial conglomerate MAPNA Group for years. It signed a contract with the Iranian giant in 2011 to supply 150 locomotives to the Islamic Republic of Iran Railways. MAPNA successfully acquired the technology and delivered the order in time.

Now the German company is expanding its presence in the Iranian market, which is in dire need of modern equipment as thousands of kilometers of new railroads, subways and electric and high-speed routes are being laid across the country.

Furthermore, MAPNA signed a preliminary deal in October 2016 with Siemens to manufacture 50 diesel electric locomotives for passenger trains. Another agreement was signed between MAPNA and Siemens last year for joint manufacture of 70 electric locomotives to be used in the 926-km Tehran-Mashhad railroad, which is being electrified.

The IRI Railways and Siemens’ transportation subsidiary Siemens Mobility signed several memoranda of understanding in January last year to develop Iran’s railroads.

The agreements concern electrification of the Tehran-Mashhad railroad and Tehran-Isfahan high-speed train, supply of 500 wagons, development of Iran’s railroad infrastructure and provision of consultation and technology.

Should the new deal be signed, IDRO and IRICO will be added to the list of Siemens’ major Iranian partners.

The new deals are part of a plan, based on which IDRO is tasked to manufacture 2,000 passenger wagons to be used in the subways across Iran. The company was supposed to find partners through a tender.

IDRO’s Managing Director Mansour Moazzami said in the ceremony that Iran will need 8,000-10,000 wagons by the end of the Sixth Five-Year Development Plan (2017-22).

“But one of our problems is the inability to manufacture the wagons domestically, making use of our own financial resources, without access to latest modern technologies,” he said.

Iran has ramped up efforts to renovate its aging railroad industry by attracting foreign investment in light of the Joint Comprehensive Plan of Action (JCPOA), a nuclear agreement between Tehran and the P5+1 (Russia, China, the US, Britain, France and Germany) that went into effect in January 2016.

In April, Iran and Transmash holding, Russia’s largest company in the railway machine-building market, finalized a memorandum of understanding (MoU) to boost cooperation in production of railroad cars.

 

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  September 2017
No. 85