Russia-based CJSC Transmashholding has entered a €2.5bn deal with the Industrial Development and Renovation Organisation (IDRO) of Iran to set up a joint venture (JV) for the manufacture of rolling stock in the country.

The Russian firm is set to own 80% interest in the JV, while IDRO will hold the remaining 20%.

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The two nations formulated the initial agreement last year, which will see Russia deliver 1,100 freight units to Iran and jointly produce a further 5,000 wagons in the country, reported presstv.ir.

Iran’s Minister of Industry, Mine and Trade Mohammad Reza Nematzadeh was quoted by the online publication as saying: “We are not concluding a purchase or contracting agreement.

"This partnership, rather, is likely to last for the next 30 years or be extended even further.”

"The new JV will be managed on a rotational basis by the two companies, while Transmashholding will be responsible for providing the necessary finances for the project."

The new JV will be managed on a rotational basis by the two companies, while Transmashholding will be responsible for providing the necessary finances for the project.

Iran will also construct a high-speed rail line between Arak and Qom under a €1.2bn agreement signed with Italian rail company Ferrovie dello Stato last month.

French rolling stock manufacturer Alstom also signed a deal with IDRO and Iran Khodro Rail Transport Industries Company (IRICO) to develop and construct 2,000 passenger wagons as part of a separate development.

Financial details of the contract have not been disclosed.

Islamic Republic of Iran Railways head Saeid Mohammadzadeh previously commented that the Iranian railway network  will require 28,000 new wagons in order to carry out a wide-ranging refurbishment of the country's rail system over the next ten years.