Azerbaijan, Georgia Close to Finalize Deal on Railway Project

Azerbaijan and Georgia are close to finalizing a deal on the terms for financing construction of the Baku-Akhalkalaki-Kars railway link, which will connect Azerbaijan with Turkey via Georgia, officials said.

Talks which were launched in Tbilisi on January 12 now focus on the terms under which Georgia will receive a 25 year, USD 200-220 million loan from Azerbaijan, Chief of the Georgian state-run Railway Company Irakli Ezugbaia told Civil.Ge.

?We are currently negotiating the terms of this long-term credit… What we [the Georgian side] are pushing for is to start repaying the credit from revenues received as a result of the operation of the railway,? Ezugbaia said.

Azerbaijan’s Transport Minister Zia Mamedov and head of Azerbaijani Railways Arif Askerov are leading the Azerbaijani delegation, which met with Georgian Prime Minister Zurab Nogaideli on January 12.

Georgian Economy Minister Giorgi Arveladze is also engaged in the talks. Ex-Economy Minister Irakli Chogovadze is attending the negotiations as a consultant to the Georgian government, as he was engaged in previous talks while serving as the Economy Minister.

Negotiators in Tbilisi said that they expect to sign deal on terms of financing no later than January 13.

The chief of the Georgian Railway Company also said that a project assessment report is expected to be ready in February, which will estimate the total amount of finances needed for implementing the project.

Reports about the total cost of the project vary from USD 400 million to USD 600 million.

A 29-kilometer portion of a new railway will be constructed on Georgian territory from Akhalkalaki to the Turkish border, and a 192-kilometer portion of the already existing railway infrastructure will be rehabilitated, Ezugbaia said.

?We want to launch construction by the end of the second quarter of 2007,? Ezugbaia said, but added that rehabilitation works on the 192-kilometer portion of railway can be launched even earlier.

He said project implementation will take about two and half years.

The railway will have a capacity to transport 15 million tons of cargo annually, Ezugbaia added.

?Kazakhstan and China are interested in the project, which will enable them to transport their cargo to the west,? the chief of the Georgian Railway Company said.

There were fears in Georgia that the launch of the Baku-Akhalkalaki-Kars railway would redirect the flow of cargo from Georgia?s Black Sea ports of Batumi and Poti. But Georgian Economy Minister Giorgi Arveladze downplayed these concerns.

?The government will take all the necessary measure in order to avoid any possible decrease in flow of cargo towards Georgian ports,? Arveladze told reporters.

?Additional transport routes are of special importance for us against the continuing economic blockade by Russia,? he added.

Armenia is against the Baku-Akhalkalaki-Kars railway, claiming that the project will further isolate the landlocked country. As an alternative, Yerevan is pushing for reopening the already existing Kars-Gyumri-Tbilisi railway. The Kars-Gyumri railway is currently not operational because of trade blockades imposed on Armenia by Turkey and Azerbaijan.

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