The development of the ITC "North-South" has intensified, but there are still obstacles

The Agroexpress project in Azerbaijan is being implemented by Alliance Logistics LLC and RZD Logistics JSC with the support of the Azerbaijan-Russian Business Council, REC, ROSEXIMBANK JSC, Azerbaijan Railways CJSC and RZD OJSC.

The task of Agroexpress is the delivery of goods using fast trains, which allows to reduce transportation costs due to the efficiently built export-import logistics.

“This is a successful start in the implementation of the Agroexpress project, and we see huge potential in its development. Considering the many advantages, this will not only be an alternative, but one of the most competitive routes. Active work is underway to connect the Astara station to the Agroexpress route for the transportation of goods to Russia as part of the development of the North-South ITC, Natig Heydarov, head of Alliance Logistics LLC, said at the event.

A day earlier, the head of Azerbaijan Railways, Javid Gurbanov, held a meeting with the First Deputy General Director of Russian Railways (RZD) Sergey Pavlov.

“The parties discussed the electrification of the Baku-Derbent railway within the framework of the North-South international transport corridor, financing the transfer of the Baku-Yalama railway from direct current to alternating current and the timing of completion of work on this road. In this context, the parties agreed to synchronize work, exchange information on the current progress of work and adopted technological solutions.

The railway to Yalama is part of the North-South route. Taking into account the expectations of transportation of large volumes of cargo along this corridor, the Azerbaijani government has decided to reconstruct the Baku-Yalama and Baku-Astara railways (border with Iran).

The length of the Baku (Balajari)-Yalama railway is 348 km. The project is financed by loans from the World Bank and the French Development Agency, as well as from the state budget of Azerbaijan.

“Azerbaijan and the Russian Federation are actively coordinating actions both on this ITC and within the framework of resolving issues of global supply chains. Including the supply of fruits and vegetables, products of the non-oil sector,” Bayramov said.

At the end of 2021, the Russian Federation was the leader in the purchase of Azerbaijani non-oil products - it purchased $877.8 million (an increase of 27.3%), that is, almost 33% of Azerbaijan's total exports of its non-oil products.

The ITC "North-South" is designed to transport various types of cargo, but its full development at the present time largely depends on the steps that Iran will take.

The International Transport Corridor (ITC) "North-South" this year will be 22 years old, and in different periods of its implementation, this ambitious project demonstrates the stages of "attenuation", then the stages of active development.

Agreements on the ITC have been ratified by 13 countries of the world, including Azerbaijan, Iran and the Russian Federation, through whose territory this route with a total length of 13 thousand kilometers from Mumbai to Helsinki is supposed to be pulled.

Azerbaijan joined the project in 2005, fulfills all obligations under it, and since the beginning of 2022 has intensified negotiations with its southern and northern neighbors to intensify efforts for the full implementation and operation of the North-South ITC.

The purpose of this Corridor is to significantly reduce (half or more) the time of delivery of goods from India to Russia, as well as to Northern and Western Europe.

TRACECA National Secretary for Azerbaijan, transport and logistics expert Rufat Bayramov told ASTNA that  “Currently, the delivery time for goods from South Asia, India to North-Eastern Europe is more than 6 weeks, while the implementation of the North-South ITC is designed to reduce travel time to 14-20 days.”

“It is clear that Azerbaijan and its neighbors are interested in the development of logistics infrastructure along this route to attract new cargo (transit of 5-10 million tons per year is expected), to generate additional income, which will positively affect regional socio-economic development, the prospects for the Eurasian export-import market. Thanks to the transit of goods from Asia to Europe and back, Azerbaijan, together with its neighbors, can increase its importance as an important logistics hub,” Bayramov said.

The representative of the Ministry of Technological Development and Transport of Azerbaijan, in an interview with ASTNA, recalled that Azerbaijan, within the framework of the North-South project, has carried out the following measures:

- built a new road with a length of 8.3 km of the railway line Astara (AR) - Astara (IRI) to the bridge over the Astarachay River;

- built a railway bridge across the Astarachay River and a 1.4 km long road from this railway bridge to a cargo terminal in Iran.

- is building a railway station and terminals for unloading goods on an area of ​​35 hectares in Iranian Astara (this territory, including a 16-kilometer section of the railway from Iranian Astara to the state border, is taken on a long-term lease).

Step of Iran

In in March 2019, a solemn ceremony was held to open a section of the Qazvin-Rasht railway (175 km, $440 million) in Iran, but another 167-kilometer Rasht-Astara road is needed to connect within the ITC.

At the end of January 2022, Iranian Minister of Roads Rostam Ghasemi visited Azerbaijan, and the parties discussed the intensification of actions on the North-South project, as well as Ghasemi and Azerbaijani Deputy Prime Minister Shahin Mustafayev took part in the ceremony of laying a new transit automobile (!) bridge across the Astarachay River on the border of the two countries near the Caspian Sea to increase traffic along the North-South transport corridor.

The construction of the road bridge should be completed in 15 months (for $6 million) and it will reduce the time of delivery of goods to Moscow from the Iranian-Azerbaijani border to three days.

On January 25, Mustafayev stressed  that the trade turnover between Azerbaijan and Iran in 2021 increased by 30%, but the development of the North-South ITC will, in particular, contribute to a further increase.

However, work on the creation of the "Rasht-Astara" section and the "Rasht-Anzeli" section (a port on the Caspian Sea, a 35-40 km section of the road) is proceeding very slowly.  In Iran, this is explained mainly by financial reasons.

As a representative of the Iranian Ministry of Roads Abbas Khatibi explained the other day, “there is a road from Bandar Abbas in the south of Iran to Rasht in the north of Iran, but from Rasht it is divided into two branches, one of which will go to the coastal region of the Caspian Sea (to Anzali) , and the other to Astara to connect to the railway network of Azerbaijan.”

“Progress on the Rasht-Enzeri railway is 70 percent. We hope that this railway will be put into operation before the end of 2022. But as for the Rasht-Astara project, more than $20 billion (!!!) of investment is required to complete it. This project can be financed in three ways: domestic financing, foreign investment and barter, and we are negotiating to clarify how to obtain financial resources,” Khatibi said.

It is noteworthy that Azerbaijan provided Iran with a soft loan of $500 million for Resht-Astara.

Iran's new estimates for the implementation of this project - $ 20 billion - inspire concern that this section of the ITC "North-South" will never be implemented, or will turn into a "long-term construction", casting doubt on the operational development of the entire North-South project."