It is part of a project to connect the Iranian Caspian port of Astara to an Azeri city with the same name. The route will connect Iran to Azerbaijan’s railroads, ramping up rail transport between the two countries.
Based on the deal, Azerbaijan is committed to transport 2 million tons of cargo via Astara when the project is completed in two years, Mehr News Agency reported on Saturday, without mentioning the date for signing the contract.
Azerbaijan has completed the part from Azeri city of Astara to the border. Iran has yet to complete the remaining section on its soil, according to Financial Tribune.
The two countries have stepped up cooperation in the past few years to develop infrastructures to activate the International North-South Transport Corridor, an international logistics route from India to Europe passing through Iran, Azerbaijan and Russia.
The extension of Astara-Astara route to Rasht, the capital of northern Gilan Province, is a missing link on the global route. Azerbaijan has agreed to invest $500 million to undertake the project.
Another railroad from Rasht to Qazvin is expected to be completed in the upcoming months, as part of INSTC. The 164-kilometer-long project, with an estimated value of 25 trillion rials (over $650 million), has made more than 94% progress.
The railroad passes through mountainous area, including 25 kilometers of tunnels and 8.7 kilometers of bridges, making its construction difficult. It includes Iran’s biggest rail bridge with a length of 1.43 km on the Sefidroud river in the city of Manjil in Gilan Province.
When completed, INSTC is expected to increase the volume of commodities currently traded between Iran and Azerbaijan from 600,000 tons to 5 million tons per year, dramatically increasing bilateral trade from the current $500 million per year.
In addition to INSTC, Tehran and Baku have also been discussing parallel pathways using the Iranian-Azeri rail connection. They recently proposed a corridor linking Georgia, Ukraine and Poland.
The participating states have planned the transportation of 200,000 tons of cargo by the end of 2017 via the new transit corridor that stretches from India to the Black Sea and Europe.
The multimodal route is estimated to reduce the time and cost of transportation of goods between India and Europe from 40 to 15 days. The corridor is said to have the potential of diverting up to 10 million tons of India-Europe trade to the route.
Currently, 72 million tons of goods are shipped from India to Europe and 25 billion tons are transported in the opposite direction every year.