Today.Az » Analytics » ‘Iron project’ in the lead
22 October 2015 [09:46] - Today.Az
By Gulgiz Dadashova - AzerNews
For decades the main transit routes through Azerbaijan ran from east to west, but today, a rail line running from south to north is expected to unleash the potential of the region’s geopolitical map.
The North-South Corridor, which will link railways of Azerbaijan and Iran, is gaining momentum as regional countries Azerbaijan, Iran and Russia are working to revive the project in a bid to gain more economic independence from energy revenues, as it promises huge financial profits.
This major transit project is expected to bring trade advantages to the Russian Federation and the Caspian littoral states, as it the most convenient and the shortest path linking the giant markets of China, India, Iran, Azerbaijan, Russia and Europe.
Azerbaijan has been investing greatly over the past decade in transportation projects with a view to play the role of transportation hub for regional countries. And now, joined by Iran, the country is working to realize this economic goal in the field of transit.
The construction of the North-South Corridor was accelerated after Iran received positive results from the nuke talks. This August, Azerbaijani and Iranian railway officials met in Tehran, encouraged by Iranian President Hassan Rouhani’s statement that for Iran, Azerbaijan is “the gateway to the Caucasus” and for Azerbaijan, Iran “can become Baku’s path to the Persian Gulf.”
Azerbaijan and Iran agreed this October to establish a joint working group to discuss actions for linking railway lines as part of the North-South Corridor and creating appropriate infrastructure along their border.
Currently, cargo transportation along the north-south route is realized via motorway, which has a number of disadvantages for handling large cargo volumes. However, railway transportation is not only particularly sustainable, but is also faster than truck and cheaper than air operations. Shipments can often be handled faster by rail because customs clearance takes place during the journey; as a result, there are no waiting times at border crossings.
The volume of freight transportation between Europe and India is 25 million tons a year, 6 million tons between Russia and Iran and 30-40 million tons between the Gulf States and Europe. Although the shortest route to Helsinki, Berlin and many cities of the Russian Federation, etc. pass through Azerbaijan and Iran, almost all cargo is diverted away from these countries, which deprives both the railways of Iran and Azerbaijan from profits.
Today, some 600,000 tons of cargo is transported on average during the year, according to official data. The new corridor’s capacity will be 1.4 million passengers and 5-7 million metric tons of cargo a year. Around 22 tunnels and 15 bridges will be built throughout the railway. The volume of cargo transportation through the corridor will amount to 6 million metric tons in the initial stage and will reach 15-20 million metric tons in the future. Accordingly, the volume of cargo transportation in the first phase will increase by almost 10 times.
The two countries will not face difficulties in building such a link as both countries already have rail networks near the border. All that is remaining is agreement on the gauge of the tracks and the construction of a 100-meter railway bridge over the Astarachay River. Under the project, the Astara (Iran) - Astara (Azerbaijan) railway line will be two kilometers long, and, according to the contract, the Iranian side will be engaged in its construction. The length of the Azerbaijani section of the road is more than eight kilometers. A cargo terminal, the construction of which was taken over by the Iranian side, will be also built on the territory of Astara (Iran) according to the agreement.
The 100-meter railway bridge will be built by an Azerbaijani company and co-funded by both countries, which are on equal footing. The tender to determine the contractor for construction will be announced in Azerbaijan in the near future.
When realized, the rail line will make it possible for Azerbaijan and Russia to export goods and raw materials to the Indian Ocean, while Iran will be able to send goods north to Russia and perhaps Europe.
In addition, the sides have already begun to discuss the simplification of customs and border-crossing procedures, as well as eye transition of Bilasuvar and Astara border checkpoints to round-the-clock work in the near future.
Along with construction work, a number of steps need to be taken, including reassessment of tariff rates, the availability of vehicles, etc. with a view to be able to achieve higher growth in international cargo transportation. Artificially inflated rates lead to Azerbaijan being left outside of important cargo routes. That is why it is necessary to create conditions for free activity of entrepreneurs. Rates are determined by the market, but the thought exists that the state should control prices to prevent artificial inflation.
Primarily, entrepreneurs themselves should be interested in the export of products through this route. The more they export, the more money will go into the country, which will bring more foreign exchange to the country positively affecting country’s economy.