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Azerbaijan to earn $50mln annually from railway project, says Azeri Transport Ministry

02 February 2007 [22:48] - TODAY.AZ
Azerbaijan Deputy Minister of Transport Musa Panahov comments perspectives of a regional railway project.

What documents or agreements on Baku-Tbilisi-Kars railroad project will be signed by the involved states during the coming meeting?

As a logical conclusion of successful negotiations, three documents are going to be signed.

The first, intergovernmental agreement on the BTAK project, is a Framework Agreement envisioning efficient transportation opportunities, security, tax privileges, agreed transit tariffs and so on. Azerbaijan, Turkey and Georgia have agreed on this document and referred to Governments for signing.

The second document is an intergovernmental agreement between Azerbaijan and Georgia on construction of a railroad in Georgia, financing of rehabilitation of old railway lines. The final version of this agreement is already ready.

The third is a Loan Agreement. As you know, Azerbaijan is going to extend a $200mln unsecured loan to Georgia's Marabda-Karsi Railroad LLC for 25 years at 1% interest rate annually. The preliminary cost of the Georgian part of the railroad is estimated at $200mln. The loan will finance construction of a new railway line and rehabilitation of the existing old railroad between Marabda and Akhalkalak. This agreement shows the mechanism for issuance, use and repayment of the loan. As per the agreement, a Coordination Council will be set up to organize expedient and efficient use of the facility.

What will the Coordination Council deal with?

The Council will have control over spending of the facility and make quarterly reports. Besides, a Management Group will be established to asses efficiency of the spending, quality of works, and to control tenders and project schedule. The Coordination Council will also prepare repayment machinery, control expenses for usage of the railroad, and approve of project budget.

What about repayment mechanism?

The repayment will start after the project is complete. The loan will fund 29km railroad and other construction of other equipment and infrastructure. The width of railroad tracks in Azerbaijan and Georgia don't agree (coincide) with Turkey's, and a station will be built at the border for changing wheels of trains. The repayment will include semiyearly installments. According to semiyearly audit, the repayment will be made by installments through the profit to be gained from transportation between Turkish border and Marabda.

When will construction start up?

At present, Turkey is working on some working projects. Turkey's Yuksel Domanic Company, which carried out technical and economic assessment, will also provide design engineering. The construction will be complete in 2009 on schedule.

What about any construction works in Azerbaijan within the project?

In Azerbaijan, locomotive base will be improved, new infrastructure will be created. We are working on the World Bank-funded project on reconstruction of the railroad between Baku and Boyuk Kesik.

What benefits will BTAK project yield to the South Caucasus, especially to Azerbaijan?

The BTAK Project is of political, economic and strategic importance for Azerbaijan. Azerbaijan will gain an access to the international transport corridor, in particular to Turkey. It will take two days to Turkey through the railroad. The project will bring an impulse to our economy. New infrastructure will appear around the railway, transportation cost prices will fall. The transportation capacity will reach 5mln tonnes within 3 years after the railway comes online and onward to 10mln tonnes later. Azerbaijan will gain at least $50mln annually during the initial years.

Can this railway line be a part of TRACECA? This railway will be a vital part of the old Silk Route although EU says the project is inefficient. Can this railroad be extended to Nakhchivan from Kars later?

There is no problem in laying a railroad between Kars and Nakhchivan after this project is opened. Also, we will get an access to Nakhchivan through Turkey and Iran. This road is to long. It is possible to lay a railway between Kars and Sadarak.

Some states and international organizations are against the project. How influential is this factor?

Armenian Diaspora has strong merits in forming this opinion. Armenian has always been doing anything possible to urge the world not to finance project bypassing Armenia. Almost 90% of Congressmen, who opposed the project, are not aware where Kars or Akhalkalak is.

Can Armenia join the project after the territorial integrity of Azerbaijan is restored?

It is a political point. Armenia razed infrastructure in the occupied territories of Azerbaijan. They destroyed 140km railroad between Baku and Nakhchivan, and 40km in their own territory. Reconstruction of this road requires at least $500mln. Armenians annihilated railway from Ijevan to Kazakh. We must repair these roads. special representative of OSCE Chairman-in-Office Andrzej Kasprzyk said there was no railroad left in the occupied lands, replying my question. APA


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