Will Russia become a rival to Azerbaijan in N-S Corridor?

TEHRAN, Jun. 09 (MNA) – Head of Trade Promotion Organization of Iran (TPOI) announced Russians' readiness to invest in construction of North-South corridor railway infrastructures that Republic of Azerbaijan had previously submitted such proposal.

Locating in North-South Corridor is one of the most important geographical advantages of the Islamic Republic of Iran which connects Russia, Caucasus region and Central Asia to South and Southeast Asia especially India which has extensive financial relations with the Russian Federation.

Strange figures of India-Russia trade / How much is Iran’s share of transit from this volume of trade?

For example, trade volume exchanges between India and Russia, according to the statistics published by the Indian Foreign Ministry, estimated an incredible figure of about $11 billion ($10.969 billion) in 2018.

Mohammad-Javad Shahjouei an expert in Transport Economy in an interview with Mehr news agency pointed to Iran’s share of goods transit exchanged between Russia and India in North-South Corridor and stated, “If we take $11 billion worth of trade exchanged between Russia and India into consideration and/or if we assume that 10 percent of this trade volume is carried out via Iran’s route, we can obtain up to $1.1 billion worth of trade only from North-South corridor and also Russia’s trade with India.”

“The important point in this trade is that it is not possible to estimate the exact figure for Iran’s income from the transit of goods between Russia and India but we can calculate the amount of cargo that can be passed through Iran’s rail corridor,” he said.

Islamic Republic of Iran can earn from $200 to $400 per ton that passes through Iran’s rail network, Shahjouei added.

Ali Ziaei an expert in Rail Transport Economy in an interview with Mehr news agency put the revenue which is obtained by Iran from rail freight passing through the country is between $75 and $100 in each ton.

According to him, Islamic Republic of Iran can earn $30 billion worth of revenue from North-South Corridor annually with the existing rail and road infrastructures.

Transit experts believe that if Iran completes its rail and road infrastructures, even if it is assumed that only ten percent of this amount of trade passes through Iran, the country can earn up to $ 1.1 billion worth of income annually from transit of goods through North-South corridor, he continued.

This is while that Iran’s revenue merely obtained from selling oil last year (ended March 20, 2021), following imposition of oil sanctions against Iran, stood at less than $10 billion.

However, in one of the years during 2000s, 9th and 10th governments, the country managed to reach record of $100 billion in oil sales in a way that such a huge record of oil sales never repeated.

North-South Corridor in Presidential Election Debates

In the first debate of Presidential Election (Iran 2021 Presidential Election) held on Saturday June 5, only one of the candidates in the Presidential Election raised the issue on the completion of rail infrastructures as one of the driving force of economic development of the country and stated that if only the country invests in North-South Corridor and/or if the North-South Corridor is commissioned, it will earn $30 billion worth of income annually which will be in favor of all walks of life.

This is while the significance of the development of transit capacities, as one of the important income resources of the country, requires that all candidates in Presidential Elections should clarify and explain their policies and plans to people on this issue.

All railway infrastructures in North-South Corridor

Attaining such revenues, as mentioned above, requires the development of rail and road infrastructures. Presently, North-South Corridor in Iran is composed of two ports, including Shahid Rajaei (Bandar Abbas) and Shahid Beheshti (Chabahar) ports which are equipped with the necessary railway infrastructures. It should be noted that Chabahar Port is scheduled to be completed next year (to start March 20, 2022).

Shahid Rajaei Port to Rasht

Currently, it is possible to activate North-South Corridor using Shahid Rajaei port to Astara Border Terminal, so that the missing link of this corridor is Rasht-Astara section. Construction and Development of Transportation Infrastructure Company (CDTIC) is currently constructing Rasht-Caspian Port and Rasht-Bandar Anzzali railways.

2. Astara-Astara Railway

Iran’s Astara to Azerbaijan’s Astara Railway was put into operation in 2018, so that this railway is connected to Russia and Finland through passing from the Republic of Azerbaijan.

3. Abandoned Iran-Armenia Railway from Jolfa Border

There is also an abandoned railway between Iran and Armenia from Jolfa Border, which is currently unused due to the Nagorno-Karabakh war broke out between Azerbaijan and Armenia. Activation of this railway was emphasized by Iranian Minister of Roads and Urban Development Mohammad Eslami during his visit to the Republic of Armenia last month in the current year.

It should be noted that in case of relaunching of this railway, the infrastructure of which is almost available and only a very limited part of this railway needs to be rebuilt, considering that Armenia has handed over the operation of its railway to the Russians under a 10-year contract, it will be possible to use Baku-Kars corridor.

This railway (Iran-Armenia via Jolfa) has been closed for many years and is currently the only railway connection to Armenia via Georgia, but a Russian Company is ready to transport Iranian transit cargo to Russia and Central Asia.

4. Gorgan-Incheh Borun Railway

Gorgan-Incheh Borun Railway, which was put into operation in 2015, connects Iranian railway to Turkmenistan. The railway is connected through Central Asian countries up to eastern Russia. This is while that most of Russia's developed and populated areas (Moscow and St. Petersburg) are in west part of this country, making it to have less economically advantages.

5. Maritime routes to Russia and Central Asia

Also, if the railway is connected to Bandar Anzali, there is a possibility of direct transit of goods from Shahid Rajaei Port to Anzali, Caspian and Astara ports and then by ferry to Astrakhan port of Russia.

On the other hand, Amirabad Port in eastern Mazandaran province is also connected to the country's railway network and due to its Ro-Ro port infrastructures (the possibility of boarding trucks to ship), regular exchanges have established with eastern ports of the Caspian Sea including Turkmenbashi in Turkmenistan and Aktau in Kazakhstan.

Significance of North-South Corridor for Russia and Azerbaijan

Prime Minister of Republic of Azerbaijan in his visit to the Islamic Republic of Iran in 2015 during the post-JCPOA period, in his talk with former Iranian Minister of Roads and Urban Development, approved the granting of facilities, valued at $500 million, and participation of Republic of Azerbaijan in construction of Rasht-Astara Railway section but it is a matter of regret to say that this amount has not yet been allocated to Iran and it seems that allocation of this amount to Iran has completely been canceled.

Last week, the Head of Trade Promotion Organization of Iran (TPOI) and Deputy Minister of Industry, Mine and Trade Hamid Zadboum in his visit to Moscow has revealed the readiness of the Russian Federation for the development of rail infrastructures in the North-South Corridor.

It seems that Russia is going to develop and construct Rasht-Astara Railway, he added.

The Director General of the Russian Export Center (RCE) in a meeting with the Iranian Deputy Ministry of Industry, Mine and Trade said that the Russian Export Center is ready to provide services of Russian companies for the construction operation of a part of North-South Corridor in the Islamic Republic of Iran in terms of provision of rail lines, switches, other parts and equipment needed.

It is more likely that provision of a part of financing needed for the completion of rail infrastructures of North-South Corridor will be transferred to Russia instead of Republic of Azerbaijan, Zadboum emphasized.

Report by Borhan Mahmoudi

MA/5229034

News Code 174547

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