ARMENIA TRANSFERS RAILWAYS TO MANAGEMENT OF RUSSIAN-OWNED COMPANY

Mediamax
Feb 13 2008
Armenia

Yerevan, 13 February: An agreement was signed in Yerevan today on the
transfer of Armenian Railways to the concession management of South
Caucasus Railways, which was founded by Russian Railways.

Mediamax reports that the trilateral agreement was signed by Armenian
Transport Minister Andranik Manukyan, the general director of South
Caucasus Railways, Aleksandr Kuznetsov, and the president of Russian
Railways, Vladimir Yakunin.

In line with the agreement, Armenia is obliged to transfer the right to
use and manage the concession assets to the concession holder, South
Caucasus Railways, for a 20-year period with the option of extending
the agreement for another 20 years. The agreement is underwritten by
Russian Railways.

The concession holder is obliged to invest 174.5bn drams [about 600m
dollars] in the development of Armenian Railways, of which 53.3bn
drams should be spent on renovating infrastructure, and 8bn drams on
buying new rolling stock. As a guarantee, Russian Railways should in
turn pay 57m dollars to the Armenian side and assume responsibility
for the fulfilment of obligations.

According to the agreement, South Caucasus Railways should within
30 days of the signing of the agreement make a lump-sum payment of
1.7bn drams to the concession provider. In addition, the Armenian
side will every year receive 2 per cent of the concession holder’s
gross revenues.