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Tehran Factory Closes As City Seeks To Buy Metro Wagons From China In Return For Oil

Commuters wearing masks against coronavirus on Tehran underground (Metro) on April 7, 2020.
Commuters wearing masks against coronavirus on Tehran underground (Metro) on April 7, 2020.

A company producing wagons for the subway in Tehran and other major Iranian cities has shut down due to delay in a government contract, while the cash-strapped municipal authorities try to secure the purchase of 630 wagons from China in return for oil.

Tehran City Council Chairman Mohsen Hashemi on Sunday announced that Tehran Wagon Factory with 500 workers has shut down after 17 years due to financial problems. According to Hashemi the government's failure to go forth with an order to build 650 wagons has forced the factory to shut down.

"It is a shame that the company which has produced more than 1,000 wagons for the Tehran metro is facing such dire circumstances and has to shut down," Hashemi said.

Pointing out the importance of quickly expanding public transport to allow social distancing, the Chairman called on the Central Bank and the Oil Ministry to expedite access to credit for public transportation in the capital.

The deadline for the Central Bank to allow the equivalent of millions of dollars in bonds to support the capital's public transportation will expire this week, Hashemi said and added that if urgent funding is not provided, the system in Tehran will be seriously challenged.

Commenting on the issue, Tehran Mayor Pirouz Hanachi on Saturday said the issue of financing a planned purchase of 630 wagons from China was being discussed with Chinese authorities. The required documents for the deal have been submitted to the Chinese ambassador in Tehran, he added.

Mayor Hanachi in a meeting with the Chinese ambassador on July 11 had said given the infrastructures laid for the underground in Tehran, 2,000 more wagons are needed and suggested that the 630 wagons be paid for by in oil exports.

The contract for the purchase of the wagons from China was put on hold after the U.S. reintroduced sanctions against Iran in May 2018. The sanctions have hugely reduced trade with Iran and depleted the country's currency reserves.

The Metro of Tehran was built by a Chinese company in the 80s and 90s. Now Tehran Urban and Suburban Railways has 6 operational lines and carries more than 3 million passengers a day.