Siemens is betting big on Iran’s railways

Siemens is betting big on Iran’s railways
Siemens Velaro high-speed trains, heading to Iran.
By bne IntelliNews May 17, 2016

Siemens, the German technology and engineering firm, announced that it will be investing and working with Iran’s railway network operator Islamic Republic of Iran Railways (IRIR or RAI), and from May 14-18 has begun listing adverts in many of Iran’s daily newspapers in both Persian and English to highlight its partnership with the rail network.

When sanctions started being removed on the Islamic Republic in January, Siemens was one of the first Western companies to rush into the country to sign several memoranda of understanding in power generation, infrastructure, technology and other sectors. 

Siemens has made a point of highlighting this in the local media, pointing also to their highly sought-after spot in Tehran’s permanent exhibition centre this week at the Iran Railway Exhibition Expo, where it is highlighting its latest technology that it will be introducing to Iran.

Siemens has been pushing its Velaro high-speed train, one of the fastest trains in the world, according to the company. The train is expected to reach speeds of 360 km/h at full speed. “Iran is a mature market in terms of rail, and the country’s demographic change is fueling an increasing need for fast, reliable and safe rail networks to support mobilit and industrialization,” Dr Mohsen Nayebzadeh, CEO of Siemens in Iran, said in a statement to Iran’s energy news agency Shana.

“Our extensive portfolio addresses all the requirements of Iran’s future transport network with technology for urban, fast intercity and freight rail. We are committed to advancing society and making a positive difference to the lives of people in Iran, using innovation, local knowledge and global ingenuity to develop a diverse, fast, modern, efficient and reliable rail network,” he said.

The company has been pushing its railway system as one of the biggest prizes on offer for Iran post-sanctions. And Iran has been crying out for a railways upgrade since the 1980s, when the country’s population went from 40mn before the revolution to over 79mn today.

Siemens signed 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 would produce 500 train carriages in CKD format and Siemens would improve electrification on two lines serving the Tehran-Mashhad line, which is in the country’s east.  

In addition, Mapna would develop the technology to manufacture Siemens F-class gas turbines in Iran with the companies jointly producing 20 of them. “With these important agreements we reinstall the long-term energy partnership between Mapna and Siemens,” Siemens chief executive, Joe Kaeser, said on a visit to Iran in February.

Desperately seeking investment

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 only has 13,000km of railway lines, much less than countries in Western Europe, even one seventh its size like the UK.

The country’s cities are spread far apart and are separated by large deserts and tough mountain terrains, which are one of the main causes for the high death toll on the roads. The number one cause of death in Iran is car accidents.

The German company is adamant that it will take the lion’s share of the rail market after recent proclamations by Iranian officials. “The government is planning a major expansion,” Mohsen Poursaeed-Aqaei, director of RAI, said in October. He said his agency had identified $25bn worth of rail projects, plus “incentive packages” to attract domestic and foreign investment over the course of the current five year development plan.