The Asian Development Bank (ADB) has approved a $165m grant to Afghanistan to build a 75km rail line to connect the country with Uzbekistan.
The rail line, aimed at improving the country's trade with Central Asia, forms the first phase of the larger planned rail networks to link Herat, Tajikistan and Pakistan.
The line will extend from Hairatan, a northern town at the border with Uzbekistan, to the Afghanistan city of Mazar-e-Sharif.
Work includes upgrading the Hairatan station yard and building a transshipment terminal.
Transport specialist with ADB's Central and West Asia Department Balabhaskara Reddy Bathula said the new line will boost freight volumes, lower costs, raise the profile of Afghanistan as a transit route, and complement two major transport corridors being developed under the Central Asia Regional Cooperation Program.
ADB's grant covers 97% cost of the $170m project with the remainder to be funded by the government.
Work will be carried out by the Ministry of Public Works and is expected to finish in June 2011.