Iran and the International Bank of Azerbaijan agreed on the generalities of issuing a $500-million loan for the construction of the Rasht-Astara railway section, said a report.

The railway section, which will link Iran and Azerbaijan via Astara, is expected to cost about $1.1 billion, half of which will be made available by the International Bank of Azerbaijan as a loan, reported Trend News Agency.

The work on the Astara section is currently under way and is likely to be completed within three to four years, it added.

Azerbaijan's Economy Minister Shahin Mustafayev had visited Iran last month to discuss the implementation of the Qazvin-Rasht-Astara railway project, which is a part of the North-South transport corridor.

It will link Northern Europe and Southeast Asia and connect the railways of Iran, Azerbaijan and Russia.

Iran's Deputy Roads and Urban Development Minister Ali Noorzad said work was progressing smoothly on the Qazvin-Rasht section and was due for completion in March next year.

Initially, three to five million tonnes of cargos per year will be transported via the corridor, and this figure will increase to 10-12 million tonnes in the future, according to preliminary estimates, he added.