The minister noted that the agreement will be signed during the visit of Iranian President Hassan Rouhani to Azerbaijan.
Meanwhile, the railway construction is expected to be completed within three years.
The minister stressed that the opening of the railway, which is part of the North-South international transport corridor, will allow to deliver goods from the West to the East and vice versa.
"This will increase the economic potential of our countries and not only ours, but the entire region. Thus, Azerbaijan and Iran will contribute to ensuring security in the region," the minister added.
Previously, it was reported that the cost of the loan agreement is $500 million.
The North-South transport corridor is designed to connect northern Europe with India and South-East Asia. The route will also connect the railways of Iran, Azerbaijan and Russia.