Investment seen making Iran’s latest fatal railway disaster a thing of the past

Investment seen making Iran’s latest fatal railway disaster a thing of the past
By bne IntelliNews November 29, 2016

The death toll from the Iranian train crash on November 25 is now 49, according to the latest information from Iran’s Fars News Agency, with more than 100 others severely injured, in what has become one of the worst railway accidents in recent memory. But huge new investment into Iran’s rail network is seen as helping to make such accidents a thing of the past.

The disaster occurred when two trains heading from different cities collided at Haft Khan Station near Shahroud, about 400km outside Tehran, killing dozens on impact; many others were immediately taken to local medical centres and nearby hospitals for care.

Reconstructions of the crash show that a train travelling between the Iranian capital and the northeastern city of Mashhad had stopped at the station while another train, the Tabriz-Mashhad, rammed into the parked locomotive.

Immediately following the tragedy, the head of Iran Railways, Mohsen Pourseyyed Aqaei, announced that he would resign from his post. AFP Tehran reported the following day that Aqaei had only resigned after four of his deputies were arrested over the crash.

The accident was attributed to “human error”, Aqaie said, explaining that the official at the rail traffic control centre had told the train driver to manually disable an automated system that was preventing it from moving toward a broken-down train.

The accident has now become a national scandal after 20 MPs called for Iran’s minister for roads and urban development, Abbas Akhoundi, to be impeached and face parliament over his response to the accident. A no-confidence vote on him will be held in the national parliament (Majlis) on December 4.

Akhoundi, for his part, offered his condolences to the families of the victims, many of whom on one of the trains were ethnic Azeris. “Since the incident occurred under my jurisdiction, I apologise to the bereaved families, the injured and all the dear Azeris,” Tasnim News reported Akhoundi as saying on November 29.

The train driver of the offending train fled the scene and was caught in a remote hideout and arrested, a judge for the Semnan judiciary stated the following day.

Underinvestment the real cause

While human error is being touted as the cause of the crash, much of the blame lies in decades of under-investment in the vital rail network in Iran, much of which was built before the 1979 Islamic Revolution.

Iran has suffered severely over the past three decades from a lack of investment in the country’s infrastructure, including the railways. At present, Iran has only just over 15,000km of railway lines, much less than in countries in Western Europe, even one-seventh the size of a country like the UK.

Iran’s rail system has faced decades of under-investment and international sanctions against the country have hampered developments in the industry, with many large-scale projects having to be shelved due to the lack of available funds to expand the network.

However, in a cruel irony, just a few days before the tragedy President Hassan Rouhani inaugurated another regional rail traffic control centre in the country’s southern Khuzestan province, which cost an estimated $82mn.

The new rail traffic control centre is part of a wider investment push into the country’s rail network and comes as several foreign firms look to gain from the country’s recent opening up after years of isolation.

When sanctions began being removed on the Islamic Republic in January after implementation of the nuclear deal, German engineering company Siemens was one of the first Western companies to rush into the country.

In May this year, Siemens agreed on a multi-billion deal to upgrade the rail network, which followed the signing of its first MoU to work on Iran’s rail infrastructure worth up to €1.5bn in early January. As part of that deal, Iran’s largest industrial construction company Mapna Group would produce 500 train carriages in CKD format and Siemens would improve electrification on two lines serving the Tehran-Mashhad line, which could help prevent any further incidents on the line. 

Siemens intends to push ahead with overhauling the current poor state of the railway and has urged the Iranian government to buy several of the latest railway locomotives available. Siemens’ Velaro high-speed train, one of the fastest trains in the world, is a likely contender to bring the system up to date, according to the company. The train can reach speeds of 360 km/h at full speed. “Iran is a mature market regarding rail, and the country’s demographic change is fueling an increasing need for fast, reliable and safe rail networks to support mobility and industrialisation,” Dr Mohsen Nayebzadeh, CEO of Siemens in Iran, said in January.

The country needs an estimated $25bn in direct investment into its rail network, which has already been designated by 2025, according to country’s minister for industry mining and trade, Mohammad Reza Nematzadeh, with an annual expenditure of $1.5bn.

Some of the increase in Iranian government funds to the sector will be part of the Eurasian region’s new East-West, North-South transport corridor. This plugs into China’s ambitions to build high-speed rail networks connecting Beijing to Istanbul and beyond, dubbed by the Chinese government as its ‘One Belt, One Road’ project.

Russia too intends to invest $1.3bn in electrifying more than 500km of track connecting Azerbaijan to Iran's northern cities and onwards to Tehran. The deal is part of a wider $5bn credit line from the Kremlin to Tehran to boost its economic clout south of the Commonwealth of Independent States (CIS).

The last fatal crash in the country happened in Nishabur (760km east of Tehran) in February 2004, when more than 300 people were killed when containers of several highly flammable items rolled off track into a village killing all the inhabitants. The exact number of deaths in that incident is still not known.

It is unlikely that following the incident, Minister Akhoundi or any other top-level official will stand down – unless impeached in December – as Tehran has much riding on current infrastructure deals like that of Siemens. In fact, removing the minister from his post could further slow deals, as any new minister would need to get acquainted with the several deals underway quickly.

News

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss