Armenia offers “preferential” railway tariffs to Azerbaijan, Turkey

Regnum, Moscow
22 Feb 05

Armenian Transport and Communications Minister Andranik Manukyan has
said that Armenia is ready to introduce preferential railway transit
tariffs to Azerbaijan and Turkey should the railway blockade of
Armenia from Georgia and Turkey be lifted. In an interview with the
Russian news agency Regnum, he said that there is no need to build an
expensive stretch of railway connecting Georgia and Turkey when there
is a fully operational link via Armenia. Although the launch of the
train ferry service between the port of Kavkaz in Russia and the
Georgian port of Poti will allow Armenia avoid expensive detour via
the Ukrainian port of Ilichevsk, Armenia will not be able to meet its
needs for cargo turnover with Russia until the Abkhaz section of the
Transcaucasus railway is restored, he added. Manukyan also said that
knowing that political factors change quickly, Armenia is building a
new highway connecting it with Iran and repaired the critical parts of
its railway. The following is excerpt from unattributed interview with
Armenian Transport and Communications Minister Andranik Manukyan as
carried by Regnum news agency web site on 22 February headlined
“Armenia is ready to introduce preferential transit tariffs for
Azerbaijan and Turkey: interview of Armenian Transport and
Communications Minister Andranik Manukyan with the Regnum news
agency”; subheadings have been inserted editorially:

Strategic location

[Journalist] Minister, as is known, Armenia has officially joined the
North-South international transport corridor (ITC). What prospects
does the participation in the ITC open for the republic?

[Manukyan] I will only add that Armenia is also a member country of
TRACECA [Transport Corridor Europe-Caucasus-Asia], the West-East
communication project.

Armenia’s desire to join the North-South ITC was voiced by me in St
Petersburg in 2002, at the meeting of the transport ministers of
Armenia, India, Iran and Russia. Our application was accepted, and in
October 2004, my Russian colleague Igor Levitin congratulated us on
our official accession to the ITC. The main goal of the project is
transportation of cargo from the Baltic states across Russia and the
Caspian Sea towards Iran, and thence via Afghanistan to India. To
service this route, the Transcaucasus railway can be used if the
Abkhaz section [in Georgia] is unblocked.

Upgrades to transport infrastructure

Naturally, we should prepare for this in advance: Armenia has invested
huge sums in bringing the routes of international importance back into
order. It is now possible to say with certainty that the main roads in
Armenia meet the international standards. The most dangerous sections
of the railway, with total length of 70 km, have been repaired with
assistance from the World Bank. If in the past average speed of a
train on the Gyumri-Ayrum section was 25 km per hour, now the
technical condition of the railway allows the trains to travel at
55-60 km per hour.

On the other hand, it is known that speed is the most important factor
of profitability. The same World Bank has elaborated the programme for
the development of the transport system of our country, which will
cost 40m dollars, of which 16m dollars will be spent on development of
the railway system. An independent audit company has already drawn up
a business plan for the development of the system and renewal of the
entire carriage park. I want to note that the state will fund the
programme as well.

Of course, Armenia’s involvement in the North-South ITC is crucially
important to our country, so we eagerly take part in all measures that
are organized within the framework of the project. I am absolutely
certain that time will come when political problems will be resolved
and this corridor will be operated at its full capacity. The same can
be said about the TRACECA programme. In any case, Armenia occupies an
advantageous position as it is located at the crossing of these roads
– both from north to south and from west to east. My goal as the
transport minister is to keep our main roads ready, so that when
issues of political nature are resolved, we do not have to do all this
in an emergency mode.

The second main highway Megri (on the border of Armenia with
Iran)-Kapan, which we plan to build, is also directly related with the
North-South ITC. This project is of immense strategic importance to
Armenia. At present, these two towns are connected with just one road
which traverses the Kadzharan mountain pass. In Soviet times it was of
local importance, that is to say, it could not be used by heavy hauler
lorries with more than 30-tonne capacity. After the aggravation of the
political situation in the region, the road via Naxcivan [Azerbaijani
exclave] was closed and Armenia was forced to invest huge sums in the
Megri-Kapan highway, which in some areas goes up to the heights of
over 2,400 m (above the sea level). Nonetheless, the road remains
hardly passable in the winter. With the length of 74 km and average
acclivity of 12-14 degrees, average speed of travel for heavy haulers
does not exceed 30-35 km per hour.

Perhaps you know the story of the project for building the Kadzharan
tunnel. Why we decided not to proceed with this undertaking and
instead to opt for building the new road Megri-Kapan…[ellipsis as
published]. I want to note that the alternative to the tunnel was
studied and elaborated on instructions by the country’s
president. When we build the second road, we will effectively ensure
the second access point to Iran, hence the strategic importance of
this project. According to preliminary estimates, building the tunnel
on the old road would cost about 45m dollars, although I think that
expenses would reach at least 60m dollars.

[Passage omitted on technical details]

I have already noted that the new highway will fit very well into the
North-South ITC, but we will build it with money from the Armenian
budget. In other words, we are making preparations. What remains to be
done is that international structures that are interested in full
utilization of communications assist in the integration of our main
roads into transit routes.

[Journalist] Is the deadline set for the beginning of the
implementation of this project?

[Manukyan] The tender has already been announced and is under way. The
construction will start on 1 April, and it is expected to be put into
operation in 2006.

Need to resume railway service to Turkey

[Journalist] What is the state of the Armenian railway at present?

[Manukyan] In 2004, we transported 2.7m tonnes of cargo using the
Armenian railways, employing 20-30 per cent of the carriage park. If
the Kars-Gyumri section and the Abkhaz section of the Transcaucasus
railway are reopened and Armenia, using its transit potential, ensures
delivery of cargo to Turkey and Russia, the total cargo turnover will
reach 10-20m tonnes. Even in this case, after the modernization under
the World Bank programme, our carriage park will be able to handle the
task.

I would like to underscore once again that at present our railway,
from the border with Georgia in the north and to the border with
Naxcivan in the south, is in good repair. If, as the European
Commission wants, Azerbaijan agrees to use these trunk railways, they
can be used both as part of TRACECA and as a component of the
North-South ITC. This will noticeably cut expenses on transportation
of the cargo.

[Journalist] A few days ago, the co-chairman of the Turkish-Armenian
Business Development Council, Kaan Soyak, said in Yerevan that if the
settlement of political problems between Turkey and Armenia is dragged
out, the Kars-Akhalkalaki-Tbilisi railway might become the reality. In
the conditions of the continuing blockade of Armenia by Turkey, to
what extent does the Armenian side calculate the possibility of
ensuring an alternative railway service to Iran?

[Manukyan] We have never been, and never will be, sitting on our
hands, allowing Armenia to be outstripped. To date, we have submitted
two programmes to international organizations. These are Vardenis
(Armenia) – Jolfa (Iran) and Yeraskh (Armenia) – Jolfa sections. Of
course, these are very expensive, but potentially undoubtedly
profitable programmes. I think that solutions shall be found. By
connecting our railway system with the Iranian one, we will gain
access to the markets of the Middle East and Asia. The Iranian side is
ready for this too.

As for the Kars-Akhalkalaki railway…[ellipsis as
published]. Currently it is talked about both in Turkey and in
Georgia. But when the Kars-Gyumri (Armenia) -Tbilisi railway already
exists, when there is the terminal on the Armenian-Turkish border for
preparing the train for switching to a different width of the railway
track, building a new 150-kilometre section is absolutely
unreasonable, first and foremost, from the economic point of view. The
initiators of this talk say that building the 150-kilometre section
will require 250-300m dollars, but the terrain in that area is such
that this sum will not be enough to build 150 km of the railway.

In addition, why should so much money be invested, for what purpose?
Here we are dealing with an attempt to put political pressure on
Armenia, to isolate it from access to transport hubs. A sensible
person should realize that it does not make sense to look for an
alternative to the Kars-Gyumri-Tbilisi trunk railway, which is ready
for operation. Besides, Armenia does not stipulate any preconditions,
we also say that we will provide preferential transit tariffs should
this service be put into operation. Factors of a purely political
nature hinder the adoption of an economically sound plan, but politics
is liable to changes. We will see…[ellipsis as published]. But I
repeat, we do not sit on our hands and have no intention to.

Mutual benefits of lifting the blockade

[Journalist] But is the Armenian economy ready for the opening of the
Armenian-Turkish border?

[Manukyan] Of course, our economy is ready. Many people say that we
will be subjected to economic expansion by Turkey. But economic
expansion is out of the question. These sorts of statements are made
by people who have no idea about the economy and business, and they
are profoundly wrong. Moreover, their statements are damaging to our
economy. If the borders are opened, trade relations with Turkey will
be normalized: Armenia has an appropriate legal framework for
this. Trade will be conducive to the development of both countries.

Recently even a Turkish businessman said in Yerevan that turnover
between Armenia and Turkey in the conditions of closed borders amounts
to 120m dollars annually, but I am certain that this sum is much
larger. In most cases, goods from Turkey arrive in Georgia and are
then sent to Armenia as Georgian goods. So, there is legal and
illegal turnover of goods between Armenia and Turkey, and according to
my assessment, turnover between Armenia and Turkey is greater than
that between Armenia and other countries.

I have already said that if the border is opened, we will be ready to
provide preferential tariffs for our transport infrastructure to
Azerbaijan and Turkey, and this is a transit route for them. The issue
of regional transport communications should finally be
resolved. Transport is the foundation of a country’s development, it
is a business which should be viewed in isolation from
politics. However, some countries unfortunately use it for political
purposes.

Georgia-Russia train ferry

[Journalist] Thanks to your efforts, as well as effort of your
colleagues in Georgia and Russia, the idea of launching the seaport of
Kavkaz is drawing to near to the logical conclusion. At which stage is
the project today? And when will the ferry start to operate at full
capacity between the seaport of Kavkaz and Poti (Georgia)?

[Manukyan] The agreement on launching the train ferry service between
the seaport of Kavkaz and Poti has been reached by the presidents of
Georgia, Russia and Armenia. [Passage omitted: details of talks]

It is noted in the agreement that the ferry should operate for two
months from the moment of signing the agreement, in other words, we
have time till 10 March. According to the preliminary agreement, the
first ferry was to leave on 10 February, but later we had to review
this deadline and to extend it to 28 February. The first ferry will
carry 24 carriages, and the cargo for it has already been prepared.

As for the importance of the ferry, it is hard to overestimate
it…[ellipsis as published]. This is a direct railway link with
Russia. In the past, we used to travel to Poti, then bore huge
expenses on taking the cargo to the Ukrainian port of Ilichevsk, and
only from there we would proceed to Russia. If in 2001, expenses for
taking one carriage to Ilichevsk amounted to 900 dollars, now they
have reached 2,100 dollars. This is connected with the fact that the
Ukrainian company Ukrferry is a monopolist and is reviewing its
tariffs almost on a daily basis.

With the launch of the ferry service between the port of Kavkaz and
Poti, there will be competition, and we will be sending the cargo that
are bound for Russia to the port of Kavkaz, we will also be able to
ship to Europe via the same route – it is cheaper. As for Ilichevsk,
the cargo bound for Ukraine will go there. Given the fact that Georgia
also does not have a railway link with Russia in the conditions of
disuse of the Abkhaz railway and sends its cargo via Azerbaijan,
covering some 720 km of extra distance and paying for transit, the
port of Kavkaz is an economically profitable project both for Armenia
and Georgia.

Reopening of Abkhaz railway would benefit all

[Journalist] Can one say that with the launch of the port of Kavkaz,
the need for railway service between Armenia and Russia will be fully
satisfied, or the restoration of service via Abkhazia remains a
priority?

[Manukyan] It is possible to say that the link between Armenia and
Russia has to some extent been ensured. Of course, it will only be
possible to talk about full-fledged link after the Abkhaz section of
the Transcaucasus railway is put into operation. With participation of
the heads of railway departments of the three countries, appropriate
working groups have been created, which we intend to join into a
single commercial body.

Incidentally, you must probably know that at present this railway is
used from Moscow to Sukhumi. There is a problem: the bridge over the
River Enguri is dilapidated, and now the assessment of the cost of
repairing it is under way. On the Georgian side the railway is also
in normal condition. Of course, there is also a political aspect of
the issue – the Georgian side talks about the need for return of the
refugees to Gali [District]. Let us see how the events will unfold
after the [last presidential] election in Abkhazia. Perhaps the sides
will reach certain agreements on this issue. This will be beneficial
for all the countries of the region, including Georgia, which
currently has to resort to transit via Azerbaijan.

[Passage omitted: about mobile communications]

From: Emil Lazarian | Ararat NewsPress