RUSSIAN RAILWAYS NOT READY TO FINANCE CONSTRUCTION OF ARMENIA-IRAN RAILWAY

ARKA
Oct 29, 2008

YEREVAN, October 29. /ARKA/. Russian Railways can take part in the
construction of Armenia-Iran railway, but is not ready to finance it
either under its investment program or from the means being invested
in Armenian Railway under concession agreement.

"Armenia finds it necessary to build a new railway to create
transportation link with Iran. This construction will be implemented
not at the cost of concession money, Russian Railways’ investments, but
from other sources", Vladimir Yakunin, the president of the monopoly,
told RIA Novosti on Tuesday.

He thinks Armenia is unlikely to invest alone.

"I don’t rule out that there can be relevant intergovernmental
agreements. Iran expresses interest in that. That is why I think
there will be financial consortium", Yakunin said.

Armenia has no railway transportation link with neighboring Iran,
Turkey and Azerbaijan. Only the railway connecting Armenia with
Georgia functions, but transit is possible only to Georgian Black Sea
ports. Armenia has no direct transportation link with Russia through
Georgia’s territory.

Armenia considers the construction of the railway as an alternative
way for transporting commodities and partial solution of the problem
of railway blockade.

Russian Railways runs Armenian Railway through South-Caucasian
Railways, Russian Railways’ subsidiary.

In February 2008, South Caucasus Railways has officially started
business operations under a concession agreement to run 750-km
Armenian Railways. The agreement is intended for 30 years with a
right of prolongation for another 20 years after the first 20 years
of operation.

Under the agreement, Russian Railway ought to invest $570 million in
Armenian Railway for 30 years. Of this amount, 230 million must be
invested in the first five years.