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Georgia and Azerbaijan to establish JV to exploit Baku-Tbilisi-Kars railway

Business Materials 21 May 2011 17:54

Azerbaijan, Baku, May 21 / Trend E. Ismayilov /

The Azerbaijani-Georgian joint venture will deal with exploitation of the Georgian section of the Baku-Tbilisi-Kars railway, which is under construction. It designed to connect the railway systems of Azerbaijan, Turkey and Georgia, a source in Azerbaijan Railways said.

"The joint venture will focus on management and organization of work on the Georgian section of the railway [Marabda - the border with Turkey (Kartsakhi)]," a source said. "The joint venture will be established only after all the construction operations envisaged under the project are finished."
He said that the joint venture will also monitor the process of returning loan funds allocated to Georgia by Azerbaijan for construction, reconstruction and rehabilitation work on the Georgian section of the new railway service.

The source stressed that the construction work in Georgia and Turkey is carried out normally. Earlier, the work was suspended in some areas due to bad weather conditions.

According to the changes made to the agreement on the operations in financing, design, construction, reconstruction and rehabilitation of the railway section Marabda-border with Turkey (Kartsakhi) between the governments of Azerbaijan and Georgia, the total amount of credit totaled $ 775 million.

The second tranche of a loan allocated by Azerbaijan to the construction and rehabilitation of the Georgian section of the Baku-Tbilisi-Kars railway has been issued for 25 years at an annual rate of five percent, Azerbaijani Transport Ministry said. The second tranche envisages allocation of $575 million by the Azerbaijani side.

The first tranche worth $200 million has been also allocated to the Georgian side for 25 years at an annual rate of one percent.

According to amendments made to an agreement which was signed between the Azerbaijani and Georgian governments with regard to work on funding, design, construction, reconstruction and rehabilitation of the Marabda-border with Turkey (Kartsakhi) railway section, the total amount of credit line amounted to $775 million.
The State Oil Fund of Azerbaijan (SOFAZ) finances the construction and rehabilitation of the Georgian section of the Baku-Tbilisi-Kars railway.

A new 105-kilometer railroad branch will be constructed as a part of the Baku-Tbilisi-Kars Railway. About 76 kilometers will stretch via Turkey, 29 kilometers through Georgia. Moreover, an Akhalkalaki-Tbilisi-Marabda railway section will be reconstructed in Georgia to increase transport capacity up to 15 million tons of cargo a year. A point of train transition from the existing train tracks in Georgia to the European one is planned to be built in Akhalkalaki.

Mammadov said earlier that the completion of construction work is planned for the first half of 2012. But, despite the agreed timeframe of the project, the sides are working to speed up the process and complete most of the works by the end of 2011.
The corridor's peak capacity will hit 17 million tons. Initially, its capacity will reach 1 million passengers and 6.5 million tons of cargo.

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