Iran, due to its geographical location, is situated in one of the most strategic regions of the world, and can be considered as the center of it. Iran is known as the “Crossroads of the World”; a crossroads that has access to the far east on one side, newly independent countries on the other, and Europe and Africa on the other. Iran’s unique position on the world map has the potential to turn the country into a global power in terms of transportation and transit; however, the aging and shortage of transportation vehicles has been a hindrance to Iran’s progress in transit compared to other countries such as Turkey and the Emirates. To further examine this issue and evaluate the opportunities and obstacles for the development of the transportation sector, we spoke with Dr. Seyyed Abolfazl Bahrehdar, the head of the Iranian Rail Transportation Engineering Association.

What role does transportation play in the country’s development policies?

In upper-level documents, the vision document and in general the legal capacities and even the statements of high-ranking officials of the country have emphasized greatly on strengthening and developing the country’s transportation network, but in practice, the growth of this sector has not been proportional to its capacities.

Mr. Rouhani, who wanted to start his first term as president, gave me a note from Mr. Turkhan, asking me to present a proposal for the country’s transportation system in the form of a manifesto. I wrote that note and handed it over to Mr. Turkhan. Mr. Turkhan believed that the late Hashemi Rafsanjani had considered the dam construction sector as the driving force and engine of the country’s development during that period. Mr. Ahmadinejad had focused on the Mehr housing sector, while Mr. Rouhani only considered the transportation sector as the basis for development decisions in the country. I had several meetings with Mr. Ahmadinejad about this matter. I told him that Your Excellency is a member of the technical and specialized family of transportation, your Minister of Roads, Dr. Behbahani, is also of the same kind, and even the head of the country’s railway, Engineer Ziyari, is of the same kind; meaning

We have a fundamental limitation in changing perspectives and approaches, despite the serious presence of activists in this field, our belief in the private sector as the driving force of economic activities in the country has not yet been established; meaning there is no roadmap for utilizing the private sector.

We are in need of fundamental changes both in terms of skilled and specialized human resources and in terms of the necessary credibility and real capital for this sector, as well as changes in policies and programs. Although legal capacities exist for the development of the rail network in the country, we are faced with obstacles in implementation. For example, in terms of implementing the law on allocating one percent of oil sales revenue to the railway, how much has actually been done? Sometimes we see a sudden drop in capacity, for example in the “Emidro” sector where there is a capacity of 20 million tons of cargo, but with an ill-advised decision, it suddenly decreases.

Railway infrastructure is essential for economic activities at a national level. Fortunately, a roadmap for the development of rail transportation was prepared and announced several years ago, which is another key factor that can contribute to the development of rail transportation. Unfortunately, the growth of the rail transportation industry has not been proportional to the country’s development.

“Mention the private sector as the driving force of economic activities in the country. What are the main obstacles or barriers to investment in the transportation sector in the country?”

A significant portion of the obstacles to investment in the transportation sector is the competition between the public and private sectors, which is most important for the stakeholders in this sector.

The presence of government companies as competitors in the transportation of goods through roads, shipping, and air travel has led to a narrowing of space for private companies. On the other hand, the presence of seemingly private companies that are supported by government agencies in various areas is also a major obstacle for the private sector.

The next factor in low profitability is the activities of the transportation sector, which is mainly due to low tariffs.

The predetermined rates in services related to transportation operations, due to the government’s ownership of companies and their widespread presence, cause many sensitivities. Therefore, the rates for air and train tickets are not enough to cover the costs and total prices of services. As a result, the private sector does not show much interest in operating in these areas.

This is while currently, rail transportation is considered a serious competitor for air transportation in terms of passenger movement, and due to its many advantages, such as increased safety and reduced environmental pollution, it has been a very good option and revives many missed opportunities. The situation is the same in the field of operating toll roads that are built or will be built through participation.

The third factor is the high rate of renovation facilities, which is a barrier to private sector investment. Investing in the renovation of transportation vehicles, especially road freight transportation, leads to millions of dollars in fuel savings, improvement of environmental conditions, reduction of accidents, and increased speed and efficiency of the transportation system. However, despite these countless benefits, there is not enough effort being made to renovate the transportation vehicles.

The high prices of domestically produced trucks and the prohibition of importing trucks from outside the country are among the main reasons for the failure to modernize the fleet. On the other hand, the facilities provided for modernization also have a high rate, and the transportation organization and terminals do not have enough capacity to support this work. It should be noted that in other areas of transportation, facilities are also provided to active individuals at a high rate, and as a result, they are burdened with heavy costs.

The renovation of road transportation in our country is very expensive and astronomical, to the point that now a bus is imported into the country for 25 billion tomans, while the original price of the same bus is only 5 billion tomans in dollars. Therefore, trucking and bus driving is no longer economically viable for drivers. Unfortunately, no government in Iran has taken steps towards investing in the future and generating income for the country’s transportation sector, like a caring father. Buying imported trucks and buses in Iran, with the astronomical taxes imposed on them, is not profitable for drivers and is not within their means. Therefore, it is clear that the price of a truck that costs 25 billion tomans reduces the motivation for renovating the fleet, and even vehicle owners and transportation companies prefer to invest their money in banks or other profitable markets instead of renovating their vehicles, to earn up to 5 times more income from transportation.

In most cases, lack of coordination between executive agencies and the presence of severe bureaucracy in investments and transit leads to a decrease in investment.

On the other hand, the bureaucracy in power creates a sense of despair and hopelessness for investors by using financial facilities in the organization of management and planning, especially the banking system.

The next issue is the complex and cumbersome laws regarding transportation. The laws regarding import, transportation, and customs are not regularly updated in Iran. In no other country is the government so heavily involved in this sector as in Iran, and they often overlook the private sector. Customs in countries like Turkey and Qatar operate 24/7 with less government interference. They are moving towards simplifying and facilitating their laws day by day. For example, in the UAE, the process of clearance, export, and transit of 20 containers can be completed within half an hour, while in Iran, the process of clearing 10 containers of dates takes more than 10 days. This is why our transportation and transit systems are not progressing, and we are at risk of losing our commercial markets.

Countries like China have presented plans such as “One Belt, One Road” to showcase their potential for economic growth in the distant future. In your opinion, what position will Iran have in future regional and global transit developments?

Basically, not only China and India, but most developing countries have based their development plans on transit and transportation.

Our transit development movement has even been sluggish compared to countries like Turkey and Qatar; the current transit statistics in Iran are high due to security issues in Pakistan and Afghanistan, but if these issues are resolved and these countries achieve stability, we may even lose this transit market. Investment in the transit and transportation sector in Iran is very weak and has always been neglected by all governments, and even this issue has not been considered as an opportunity to replace oil revenues.

With the intensification of sanctions against Iran, foreign liners no longer come to Iran. Many ports in Iran, including Bandar Abbas, Bandar Imam Khomeini, Bandar Bushehr, etc. are under sanctions and only Chabahar port is exempt from sanctions. This is while we have easily missed the opportunity to develop the cheap Chabahar. During the Ahmadinejad government, when Iran’s oil income was suitable, the opportunity to develop the Chabahar region was fully available and this region could have flourished and developed with 2 billion dollars, and we did not need Indian investment in this region. Chabahar, due to its convenient geographical location with the deepest waters and the only oceanic port in Iran, has special conditions for maritime transportation. If at that time we had only developed the Chabahar region and the infrastructure of Sistan and Baluchestan province with 2 billion dollars, it can be confidently stated that we

With this opportunity, even worse news is heard. Soon, six Arab countries in the Persian Gulf region will create a joint railway that will connect India to Europe without the need for the Chabahar port in Iran.

India has deceived Iran in a way and “abandoned” it, and instead joined the “Persian Gulf Railway” instead of Chabahar, which has gained “astonishing speed” after normalizing relations between Arab countries and Israel. One end of this joint transit corridor, which passes 300 kilometers through Saudi Arabia and Jordan, reaches the port of Haifa in Israel and then Turkey. This project, which began construction in 2009 and is approximately 2,000 kilometers long, will be operational by 2025.

In addition to having a large economy, India is pursuing modernization of agriculture and water resource management, and Israel is a leader in water management in the region.

Previously, India had also disregarded the Chabahar agreement and sent dozens of containers containing food items such as rice, tea, coffee, and seafood to Russia through Georgian ports. According to the Chabahar agreement, India was supposed to transfer transit shipments through the Chabahar port to Afghanistan, the Middle East, and Russia. Chabahar is the only sea gateway for transporting goods that benefits from some economic exemptions in the extensive sanctions imposed by the United States.

However, Turkey’s role in pushing Iran out of the transit zone has been more prominent than India. Turkey has attempted to remove Iran from the China-Europe corridor by constructing a new rail transit route between Istanbul and Xi’an, naturally diverting the China corridor towards its own desired route. This country has even tried to remove Iran from the transit route of “Zangzur”, which was occupied by the Armenian-inhabited region of Karabakh by Azerbaijan.

Transportation and transit in Turkey is one of the main priorities of this country’s trade. Turkey has been successful in renovating its road fleet, to the point that all of its trucks have been replaced with imported trucks with global capacity at a quarter of the current price in Iran, with bank loans and almost zero interest and a two-year installment plan. Additionally, Turkey has been very successful in updating its laws and regulations for imports and customs, compared to Iran. Therefore, this is the reason why this country has reached its current successful position and the gap between its transportation and ours has become very wide.

Unfortunately, the focus on development and progress in all governments in Iran has been weak, and instead of action, we see slogans that stem from prioritizing politics over the economy and “ideological preferences over national interests”; a situation that has been exactly the opposite in Turkey under Erdogan.

If Iran does not take steps towards developing transit and strengthening its presence in international corridors, in the not-so-distant future it will be removed from transit routes such as the Silk Road.

What practical solutions can you suggest to overcome the development impasse and compensate for the backwardness in the transportation and transit sector?

The gap between developed and developing countries in comparison to others depends on the extent of utilizing capacities such as skilled and specialized human resources, scientific and technological capabilities, and natural resources. This is an important factor that has drawn the attention of all actors in the political, economic, and social fields of countries.

Transportation is an interdisciplinary industry that has a significant impact on all aspects of society. In the current circumstances, the slogan that rail transportation has various advantages has long passed and is no longer applicable. We must pay special attention to the fact that it has become a strategic sector for countries in the implementation scene.

In the transportation sector, the world is thinking about preserving the interests of society from a profitability perspective, and the development of transportation activities in terms of increasing welfare and speed is astonishing. New perspectives in Europe and other countries and regions also reflect this for the development of rail networks.

The European Union has committed to electrify all of their railway networks by 2030. Currently, about 26% of the world’s railway network is electrified and more than 75% of freight transportation is done through this electrified network. Speed, accuracy, safety, and facilitation for cargo owners and passengers are fundamental approaches. However, the comprehensive transportation plan, which reflects our roadmap to reach the horizon of 1404 and achieve first place in the region, remains on the ground; a plan that should enlighten us and be our roadmap and priorities for dealing with a transportation system that is responsive to competitive conditions in the region and globally.

Currently, many countries do not rely solely on government resources because they have limited capital, so they use methods such as P.P.P, BOT, and others.

Iran’s rail industry alone requires a minimum investment of $25 billion for development. Iran is aiming to develop its railway network to a length of 25,000 kilometers. These extensive rail lines, if implemented and under favorable political and economic conditions, can turn the country into an important transit channel and be a good stimulus for Iran’s economy.

There was hope that after the nuclear deal, we would attract some of this capital through foreign investment. Many companies had entered Iran for this sector of transportation, but with the US withdrawal from the deal, most of these companies left Iran and the development of Iran’s rail lines was severely delayed. Of course, with the improvement of relations between Iran and Western countries, these companies can enter Iran’s transportation industry again, but considering the previous experience, their return is time-consuming and requires more than a year, and we cannot expect to see any new changes in terms of foreign investment in this sector in a short period of time.

In the aviation sector, issues such as the spread of coronavirus and the crash of the Ukrainian plane have dealt a severe blow to Iran’s airlines. While coronavirus has affected all airlines around the world, the aging fleet of Iranian airlines has exacerbated this crisis for Iran. Additionally, Iranian airports do not have a suitable situation.

It should be noted that only 20% of transportation problems are related to sanctions, while most issues in this sector are due to mismanagement.

Iran needs extensive activities for the development of its airports and airplanes because Iranian airlines are facing many problems due to the aging of their aircraft fleet. For example, Iran Air needs at least 50 new airplanes to return to normal operations. This is while each new airplane costs an average of over 100 million dollars. Even if the company wants to buy second-hand airplanes with suitable working hours, it would still have to spend between 5 to 10 million dollars per flight on average. Many airports in the country, including Tehran, Isfahan, Mashhad, Tabriz, and Shiraz, also need renovation and development plans.

On the other hand, in the field of transportation industry, the truck and bus fleet of Iran has become severely worn out and due to the increase in currency exchange rate, the price of trucks and buses has also increased. Many drivers are unable to afford to buy new buses and trucks.

The number of old trucks in Iran has reached over 350,000 units, and the high level of wear and tear on these vehicles has various reasons. 45% of the trucks, 25% of the trailers, approximately 5% of the vans, and 23% of the pickup trucks are old and worn out.

And finally, the situation of roads in Iran is not very suitable and there are many accident-prone areas in it, and overall, the existing roads in Iran also need development and improvement.

Currently, in the transportation sector, approximately 6.5 to 7 percent of the gross domestic product is spent on damages caused by road accidents, which is a very high amount. This is while if necessary investments are made in road infrastructure and necessary improvements are made in the automotive industry, a significant portion of these damages can be prevented and human error can be minimized.

Thank you for the opportunity you have given us.