Azerbaijan, Pakistan to Boost Cooperation on North-South Corridor Development

Azerbaijan and Pakistan have reaffirmed their commitment to strengthening cooperation in the development of international transport routes, with a particular focus on the North-South International Transport Corridor (INSTC).

The agreement was reached during the recent visit of Pakistan’s Prime Minister, Shehbaz Sharif, to Azerbaijan. Discussions between Prime Minister Sharif and Azerbaijan’s President Ilham Aliyev weighed in on enhancing connectivity, facilitating trade, and improving regional transport infrastructure.

Both sides emphasized the strategic importance of the INSTC in fostering economic ties and streamlining transit operations.

“We have discussed opportunities in the transportation sector. Taking into account that Azerbaijan is actively promoting two important international projects across its territory - two corridors North-South and East-West. Azerbaijan is an active member on both tracks. The creation of connectivity points between us will definitely create additional opportunities,” President Aliyev said during the Azerbaijan-Pakistan Business Forum in Baku.

He elaborated that government members responsible for the transportation sector had been instructed to explore new opportunities for regional cooperation, including the establishment of contacts between the transportation companies of the two countries, including seaport and railway administrations.

Prime Minister Sharif reaffirmed Islamabad’s strong interest in leveraging the INSTC’s potential, outlining efficient, reliable, and cost-effective transportation system and connectivity for achieving common targets.

“We will be fully supporting our vision in this regard. I can assure you that Gwadar Port can play a very pivotal role in promoting our trade, inward and upward… I think this will be a game changer,” Sharif said, assuring a close collaboration personally with President Aliyev to realize this project’s potential.

Gwadar Port, a deep-sea port on the Arabian Sea, is in Pakistan’s Balochistan province. Positioned as a vital component of the China-Pakistan Economic Corridor, the port is expected to serve as a significant trade and logistics hub in the region.

Strategically situated at the entrance of the Persian Gulf, near the Strait of Hormuz – approximately 533 km (331 miles) from Pakistan’s largest Karachi port, 120 km (74 miles) from the Iranian border, and 380 km (236 miles) northeast of Oman’s nearest coastline across the Arabian Sea – Gwadar is a crucial point for maritime trade routes connecting the region. Its strategic location could enhance its role in international trade, making it a key link between South Asia, the Middle East, and beyond.

Pakistan has announced its readiness to join the INSTC, as revealed by its Ambassador to Russia, Muhammad Khalid Jamali, who explained it as a strategic move for expanding Pakistan’s trade, connectivity, and economic growth.

The INSTC, a 7,200 km-long multimodal transport network linking Asia and Europe, was established in 2000 by India, Iran, and Russia to reduce cargo transit costs and time. By integrating into this corridor, Pakistan aims to diversify trade routes, access new markets, and strengthen regional ties.

Collaboration with Azerbaijan, a key INSTC player, could enhance logistics infrastructure and trade opportunities. Additionally, Pakistan could benefit from Azerbaijan’s energy resources, improving energy security and industrial growth.

On Tuesday, President Aliyev signed a decree to restructure the state-owned Azerbaijan Railways (ADY) by merging the Baku International Sea Trade Port into it. According to the document, the port's rights and obligations, as determined by the international agreements to which Azerbaijan is a party and the normative legal acts of the country, as well as its property, are transferred to ADY.

In December 2024, an agreement was signed between Azerbaijan and Russia to enhance cooperation on transit cargo transportation via the INSTC, including the development of railway transportation. The document fosters joint efforts for the development of railway infrastructure and transit transportation while increasing the potential of the Western route of the corridor via Azerbaijan.

In September 2024, ADY secured a $131.5 million loan from Asian Development Bank for the modernization of the Sumgayit-Yalama railway line along the INSTC. Last year, the company also completed the reconstruction of the Astara freight terminal in Azerbaijan and introduced a fast customs clearance service.

Meanwhile, authorities from Azerbaijan, Russia, and Iran are set to discuss the progress of the construction of the Rasht-Astara railway line, which is a part of the INSTC. The Rasht-Astara railway is the only missing component of the uninterrupted rail connectivity between Russia and Iran along the western coast of the Caspian Sea. If completed, trains from Central Russia could seamlessly travel to the Indian Ocean coastal ports of Iran, and back.

INSTC consists of multiple routes: the western land route runs through Azerbaijan, the eastern route passes through Turkmenistan and Kazakhstan, while the waterway traverses the Caspian Sea. The main goal of this route is to reduce the cargo transportation time from India to Russia, as well as to Northern and Western Europe from over 6 weeks to 3 weeks with the corridor’s full-fledge exploitation.