Economy, Domestic Economy

Tehran, Baku to Sign INSTC Project Financing Deal in Feb.

Tehran, Baku to Sign INSTC Project Financing Deal in Feb.
Tehran, Baku to Sign INSTC Project Financing Deal in Feb.

Iran and Azerbaijan will sign an agreement on the financing of Rasht-Astara Railroad project next month.

Announcing the above, Nurollah Beiranvand, the deputy head of the Islamic Republic of Iran Railways, also told Azerbaijan Press Agency’s Tehran bureau that the agreement will cover midterm planning.

“Azerbaijan will finance this project and Iran will provide funds for further costs,” he said.

Earlier this week, Iran’s Deputy Roads and Urban Development Minister Asghar Fakhrieh-Kashan announced that the Rasht-Astara Railroad project will be jointly carried out by Iran and Azerbaijan, each providing 50% of the required finances, noting that Azerbaijan will fund $500 million and Iran will invest the same amount in the project.

Beiranvand noted that Rasht-Astara Railroad is of great importance for the activation of the International North-South Transportation Corridor and South-West Corridor.

The INSTC project 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.

According to Fakhrieh-Kashan, when the Rasht-Astra Railroad becomes operational, a main section of the International North-South Transport Corridor will be completed and cargo can be transited from India and China to Central Asia, Azerbaijan, Russia and Europe through Iran.

The South-West Transport Corridor is a newly-proposed transit corridor that stretches from India to the Black Sea and Europe. The path is touted as an “economically viable” route for the transportation of 72 million tons of goods shipped from India to Europe and the 25 billion tons in the opposite direction every year.

“After signing the agreement, a tender will be announced and a commercial agreement will be signed. Within two or three months, the implementation of the project will commence,” Beiranvand added.

He also referred to another strand of the INSTC corridor, the railroad connecting Iran’s northwestern city of Astara to the eponymous Azerbaijani city and said: “In this project, Azerbaijan made a direct investment in Astara station and bears all responsibility.”

Construction work on this route is said to have finished and it was scheduled to be inaugurated last week, as announced by Roads and Urban Development Minister Abbas Akhoundi. However, there was no report on the inauguration as of Wednesday.

Beiranvand noted that Azerbaijan is committed to transporting 2 million tons of cargo via Iran’s railroads network per year.

“Astara-Astara is ready for use. We are now waiting for Azerbaijan to finalize the coordination works. I think the first train will move down this railroad within the next two or three weeks,” he said.

A completed section of the railroad was tested in March 2017 after a train set off on a maiden journey from Azerbaijan’s Astara. The train travelled 8 kilometers to the border from where it entered the Iranian section of the route.

The railroad, passing through woods and mountains, includes 25 kilometers of tunnels and 8.7 kilometers of bridges, making its construction difficult. It crosses Iran’s biggest rail bridge along the way with a length of 1.43 km on the river of Sefidroud in the city of Manjil, Gilan Province.

Qazvin-Rasht is another missing link in INSTC. 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.

Representatives from Iran, Russia, India, Belarus and Azerbaijan are expected to attend a forum on the International North-South Transport Corridor in Tehran on Feb. 17.

Add new comment

Read our comment policy before posting your viewpoints