July 24, 2020
The main investment project that Russia has had underway in Iran has been canceled by Russia, essentially bringing Iran-Russia economic cooperation to an end.
The state-owned Russian Railways has pulled out of a $1.3 billion project for electrification of the rail line between Garmsar, just southeast of Tehran, and Ince Burun (Narrow Cape), the border post between Iran and Turkmenistan near the Caspian. (See map above.)
Most of the line is part of the original north-south Trans-Persia Railway built in the 1930s as one of Reza Shah’s main development projects. The electrification project is part of the Islamic Republic’s development plan to boost trade with the Central Asian republics.
The Russian company said it had given up the project under the pressure of US sanctions imposed on Iran, Interfax reported February 25, although the firm said more than a year ago that sanctions would have no impact.
The project envisaged the electrification of 495 kilometers, including 203 km through the Alborz Mountains, a line with 95 tunnels.
On July 2, 2018, local news outlets in Iran reported that Russian Railways had begun the electrification project.
According to the contract signed by Russian Railways CEO, Oleg Belozerov, and Iran’s Minister of Roads and Urban Development, Abbas Akhoundi, the Russian government had undertaken to provide 85 percent of the funding. Supreme Leader Ali Khamenehi authorized the remaining 15 percent to be taken from the National Development Fund of Iran, Akhoundi said.
Belozerov said then that sanctions would not impact the project.
The Russian Construction engineering company RZD International LLC, a subsidiary of Russian Railways, was named as the main contractor.
Belozerov said at the time that the project would double the maximum speed on the link to 120 km (about 75 miles) per hour and raise its haulage capacity fourfold to 10 million tons a year.
Iran and Russia have signed multiple contracts in recent years, but none of them has materialized so far, Radio Farda reported.
After a meeting with then-Iranian Minister of Telecommunications Mahmud Vaezi, then-Russian Minister of Energy Alexander Novak announced March 13, 2017, that Tehran and Moscow had discussed a plethora of contracts worth $10 billion. But nothing has come of those discussions, Radio Farda reports.