Azerbaijan, Russia and Iran set up JV on North-South project
BAKU – Heads of the railway offices of Azerbaijan, Russia and Iran signed on Tuesday an agreement on establishing a joint venture to establish the North-South transport corridor.
The joint venture will be based in Moscow, while its affiliates will be located in Baku and Tehran. Within four months, the JV will develop a business plan on building the Rasht-Astara (Iran) - Astara (Azerbaijan) railway.
The railway will be constructed on the basis of a Build-Operate-Transfer (BOT) contract signed for 15 years. Afterwards, the project will be reviewed, and if the funds invested in it are returned, the railways in these countries will be transferred to their use.
About $400 million is to be invested in the construction operations. Investment is to be drawn by the participating countries at the expense of their banks, as well as other regional financial institutions.
Initially, the volume of freight to be transported by the railway is projected at 5 million tons per year, and subsequently the volume of goods will increase to 20 million tons.
At present Russia transports some 20 million tons of cargo to India per year. After commissioning the North-South railway, these goods are to be transported along this route. Accordingly, transportation costs will be reduced by 30 percent, analysts estimate.
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