RUSSIAN COMPANY TAKES OVER ARMENIAN RAILWAY
By Shakeh Avoyan

Radio Liberty, Czech Republic
Jan 16 2008

Russia’s state-run railway operator formally took over the long-term
management of Armenia’s rail network on Wednesday, pledging to
give it a new lease of life with hundreds of millions of dollars
in investments.

Transport and Communications Minister Andranik Manukian signed a
30-year management contract with Vladimir Yakunin, the visiting chief
executive of the Russian Railways company, after officially declaring
the latter the winner of an international tender.

The Russians, who have the option of extending the deal by another 20
years, are to make a one-off payment of $5.5 million to the Armenian
government and invest at least $570 million in the Armenian railway.

Of that, $220 million is supposed to be invested in the next five
years. The government will also get 2 percent of its annual operating
revenues.

Manukian said the deal is the only way to prevent the cash-strapped
and underused network from collapse. "Please understand that if we
left the railway in the current state, we would have no train fleet a
few years later," he told reporters during the signing ceremony. "And
you also know the state of rail tracks and other infrastructure."

Manukian also argued that Russian Railways’ investment commitments
exceed the $170 million minimum set by the government in its bidding
specifications. "That is why I believe we are making a very good deal,"
he said.

Under the terms of the agreement, the Russian investments will jump to
$1.8 billion if Armenia restores its rail communication with Turkey
and Azerbaijan. The sum is to total about $2.2 billion in the event
of the reopening of the Abkhaz section of Georgia’s railway linking
the region to Russia.

But Yakunin made it clear that reopening those rail links, closed in
1992-1993 because of the conflicts in Nagorno-Karabakh and Abkhazia,
is "not our job." "We are not politicians, we are railway workers,"
he said. "What we are saying is that we will do everything in our
power to help end the isolation of the Armenian railway."

According to Yakunin, Russian Railways found the Armenian rail network
to be in a better shape that it expected and is buoyed by a growing
volume of rail cargo shipments to and from Armenia. Yakunin also said
that the new network operator avoid drastically raising Armenian rail
tariffs and will seek to further boost the cargo turnover instead.