Iran and Russia have signed an agreement worth $1.6 billion to build the Rasht-Astara railway, a project in northern Iran which will be key to the transit of cargo through the International North-South Transport Corridor (INSTC).

The ceremony of the agreement’s signing took place on Wednesday, with Russian and Iranian presidents, Vladimir Putin and Ebrahim Raeisi, participating in it.

“This is a very important step towards the launch of this transport corridor [North-South], a project that concerns a whole number of countries and that is really absolutely mutually beneficial for all states,” TASS quoted as Peskov saying on Wednesday.

The 162-kilometer railway will connect the city of Rasht, near the Caspian Sea, to Astara on the border with Azerbaijan. Once completed, the rail link will allow rail freight transport from the Persian Gulf to Helsinki in Finland via Russia’s Saint Petersburg.