Iran is building a 51-km railway linking its southwestern city of Khorramshahr and the southern Iraqi city of Basra, national media reported Saturday.

Iranian Railways Director Abbas Nazari told Mehr news agency that nearly 90% of the first phase of the project inside Iran (about 16 km) was complete.

He said Iran was currently in talks with the Iraqis over the construction of the Iraqi section of the line.

The project will improve transport links between Iraq and the Persian Gulf, Afghanistan and Pakistan.

According to Press TV, Iran has allocated $1 billion for Iraq's reconstruction.

"A portion of the amount is allotted to railway construction projects," it said.

TEHRAN, January 30 (RIA Novosti)