Iran and South Korea are finalising an agreement to jointly manufacture railbuses for public transportation in suburban Tehran, said an Iranian official.

Companies from both the countries will together produce railbuses under an expected €700 million ($823.4 million) deal that is estimated to be signed by March, Saeed Mohammadzadeh, head of Islamic Republic of Iran Railways, was quoted as saying by Iran Daily News report, citing Trend News Agency.

He added that each day over 500,000 cars serve commuters traveling to and from Tehran posing economic, environmental and health hazards to the population.

Mohammadzadeh further noted that within four years, an Iranian-Korean consortium will supply part of the wagons needed to create the railbus system in suburban Tehran.