Iran-Azerbaijan Economic Commission Convenes in Tehran

EghtesadOnline: The 14th Iran-Azerbaijan Economic Commission held meetings in Tehran on Monday and Tuesday.

News ID: ۷۸۵۷۹۸

20 January 2021

On the first day, the meeting was co-chaired by Iran’s Economy Minister Farhad Dejpasand and First Deputy Prime Minister of Azerbaijan Shahin Mustafayev.

Mustafayev led a 14-strong delegation to the meetings held in the Iranian capital city, Mehr News Agency reported.

The joint commission aimed to explore ways of boosting bilateral cooperation in different areas, including transportation, energy, industry, trade, telecommunications, new technologies, health and treatment, tourism, agriculture, bank and insurance.

Among agreements reached between the two sides was a memorandum of understanding on development of rail cooperation, based on which cargo transit via railroad between the two countries should increase by 2 million tons per year.

In 2020, a total of 480,000 tons of cargo were transported between Iran and Azerbaijan.

Azerbaijan’s Top Export Market Among Persian Gulf States

Iran was Azerbaijan’s top export market among the Persian Gulf countries in the first 10 months of this year, according to the State Customs Committee of Azerbaijan.

Official statistics show Iran, the UAE and Oman were the top three export destinations of Azerbaijan among the countries under review.

The volume of export to Iran stood at $34.5 million, while it amounted to $2.1 million with Oman, Azerbaijan State News Agency reported.

Citing the State Customs Committee, the news agency earlier reported that Turkey, Tunisia and Iran were Azerbaijan's key trade partners among the Organization of Islamic Cooperation countries in January-October of this year.

Bilateral trade with Turkey stood at $3.5 billion, while it amounted to $296.2 million with Tunisia and $274 million with Iran.

Trade with Tunisia has increased, while it has decreased with Turkey and Iran, compared with the same period of last year.

Rail Ties

Mustafayev also met with Minister of Roads and Urban Development Mohammad Eslami and exchanged notes regarding the completion of Astara-Astara railroad, which is part of the International North-South Transport Corridor, as well as creation of a new terminal for receiving vehicles by road at Astara border crossing and construction of a transit bridge that connects Baku-Astara Highway to Ardabil-Astara-Rasht Highway.

“Next month will see the conclusion of an MoU in this regard and the start of the terminal and bridge projects,” the news portal of the Ministry of Roads and Urban Development quoted Eslami as saying.

“Enhancing the movement of Iranian truckers heading to Azerbaijan and opening up opportunities for Iranian companies to engage in the reconstruction of areas stricken by 2020 Nagorno-Karabakh war were other topics of discussions with the neighboring country’s senior officials,” he added.

According to the Azerbaijani official, as many as 13 meetings have been held between the presidents of Iran and Azerbaijan over the past seven years and several documents have been signed between the two neighboring countries.

Mustafayev announced Azerbaijan’s commitment to implement these agreements. He referred to 18% growth in goods transportation via North-South Transport Corridor over the past year and said, “Transit and exchange of cargo via Astara-Astara railroad also increased by 25% over the past year.”

The previous meeting of the joint economic commission was held in Baku, Azerbaijan, on March 19, 2019.

INSTC is a major transit route designed to facilitate the transportation of goods from Mumbai in India to Helsinki in Finland, using Iranian ports and railroads, which the Islamic Republic plans to connect to those of Azerbaijan and Russia.

The corridor will connect Iran with Russia’s Baltic ports and give Russia rail connectivity to both the Persian Gulf and the Indian rail network. This means goods could be carried from Mumbai to the Iranian port of Bandar Abbas and further to Baku. They could then pass across the Russian border into Astrakhan before proceeding to Moscow and St. Petersburg, before entering Europe.

INSTC would substantially cut travel time for everything from Asian consumer goods to Central Eurasia’s natural resources to advanced European exports.

Astara Port, with an area of 55 hectares, connects Iran and Azerbaijan. It is located at 550 kilometers of Turkey and 1,400 kilometers of Persian Gulf coasts. It is the only northern port linked to Azerbaijan’s land border and the only one located near the neighboring country’s railroad and the whole of European rail network.

The rail freight terminal in the Iranian town of Astara is continuing to strengthen its significance on the International North-South Transport Corridor. In 2019, it handled freight volumes by around 38% more compared to the previous year. With the completion of Astara-Rasht-Qazvin railroad, rail freight traffic on the corridor will increase significantly.

The Astara rail freight terminal is located 1.4 kilometers from the border with Azerbaijan. It started transshipment operations in February 2018 when the first freight train crossed the border on the Astara (Azerbaijan)–Astara (Iran) railroad section.

During two years of stable activities, the facility handled approximately 630,000 tons of freight: around 264,000 tons in 2018 and around 364,000 tons in 2019. In terms of growth, rail freight traffic has increased by almost 38%.

Moreover, there has been set another milestone last year. In November 2019, the Astara terminal handled a record monthly volume of around 40,500 tons, RailFreight reported.

The 10-km extension of Azerbaijan’s 1,524-mm gauge rail network runs for around 8.5 km in Azerbaijan and 1.5 km in Iran, including an 82.5-meter long, 8-meter high and 11.8-meter wide bridge over Astarachay River that forms the border.

It was built at a cost of around $60 million, financed by Azerbaijan, including a 35-hectare freight transshipment facility that will be operated by Azerbaijan’s national rail operator ADY under a 25-year BOT (build-operate-transfer) agreement with Iran’s national railroad IRIR.

The new line forms part of the International North-South Transport Corridor that will link northern Europe with the Indian Ocean upon completion.

"The north-south transit route, which the two countries are currently participating in for the implementation of the Rasht-Astara railroad project, means a more convenient, cheaper and shorter route for the two countries, countries of the region, and even for Asia, Europe and Africa, indicating that our cooperation is in the interest of the peoples of the region and the world,” said President Hassan Rouhani at the Azerbaijan-Iran Business Forum back in March 2019.

His Azerbaijani counterpart, President Ilham Aliyev, said the Rasht-Astara railroad would be "built in a short span of time, opening new opportunities for the entire Eurasian region".

The main freight traffic (over 80%) at the Astara terminal runs from Russia to Iran and backwards. In terms of cargo types, a key role plays wood and wood products with a share of 48%.

Other types have the following shares: building materials – 18%, grain – 17%, others including fruits, vegetables, containers – 17%. As for the daily transshipment, this volume was 23 wagons or 1,337 tons in 2019 (a year before, it was 16 wagons or 1,056 tons).

The construction of the rail freight terminal in Astara started in 2016 by ADY Express, the freight forwarding subsidiary of Azerbaijan Railways. Currently, the facility has three spur tracks and a storage area of 1,440 square meters for transshipment of goods.

ADY Express plans to construct four additional spur tracks and four dedicated terminals in Astara (Iran): for general freight, container, oil and grain. As a result, the overall annual capacity of the facility will be 3.5 million tons.

However, these plans depend on the date when Iran will complete the construction of the Astara–Rasht–Qazvin railroad. This line will provide a faster and more reliable connection from Russia and Azerbaijan to Iran.

At present, all freight is transshipped at the Astara terminal from wagons to lorries for further transportation across Iran.

The Rasht-Qazvin section was launched in March 2019 while the Astara-Rasht stretch will be available for freight trains in 2021, if the coronavirus pandemic does not disrupt the ongoing work.