Armenia-Iran railway construction project remains extremely questionable

ArmInfo. Armenia's Ministry of Transport, Communications and IT has a business plan related to implementation of Armenia-Iran railway construction program, Minister Vahan Martirosyan stated at the press conference on the results of 2016 on December 19.

According to him the business plan points at the concrete investments and the program's payback period, research of certain sections of the future road has been conducted, on the results of which the Transport Ministry works with potential investors. However, the Minister did not provide any information about the investors, amounts of investments and terms of project implementation. '' More detailed information will be provided when there is dynamics in negotiation process'', he stated, adding that the implementation of the program is among priority tasks of the Armenian government.

Meanwhile, the assessment of the project cost was made 3 years ago.  On June 6 in a talk to ArmInfo's correspondent Deputy Minister of Transport and Communication of Armenia Arthur Arakelyan stated that Construction of Iran-Armenia railway has been considered economically justified based on the results the feasibility study. The Deputy Minister recalled that in May 2012 the Armenian and Iranian sides signed concession agreement according to which discussions of feasibility study, its main tasks, construction and financing of the project were held.

To recall, Armenia and Iran signed a concession agreement in May 2012. In cooperation with Dubai-based investment company, Rasia FZE, a feasibility study of the Southern Railway project was developed. It is anticipated that the construction will take 6 years. The feasibility study of the project Southern Railway of Armenia (Iran-Armenia railway) is ready. The railway is supposed to connect Asia with Central Europe.  It will be 305 km long and will consist of 86 bridges and 60 tunnels. The estimated cost of the project is $3.5bn. According to the program the construction is to be finished by 2022.  It is anticipated that the annual freight activity on the railway route from Gagarin Station (Gegharkunik region) to Agarak (Syunik region) will total 25 million tons. This route is by 44 shorter than the earlier planned railway section Gavar-Agarak.  It will be linked to the operating railway network. The launch of the Southern Railway of Armenia and Southern Highway of Armenia was announced in Jan 2013. Then a trilateral Memorandum of Understanding was signed by the South Caucasus  Railway of Armenia, Ministry of Transport and Communications of Armenia and Rasia FZE.  A year ago, on November 16 commenting on the prospects of Chinese investmetns in the railway project Chinese Ambassador to Armenia Tian Erlong stated that it will be possible to speak of real investments and dates of implementation of the Iran-Armenia railway project after the feasibility study of the project is prepared. He stressed that at the current stage two Chinese companies are conducting the feasibility study of the project on a non-repayable basis to see the expediency of the Iran-Armenia railway project.  

To note, according to ArmInfo's economic analysts, there are three factors that make the project inefficient. First, the Armenian railway cannot have direct access to Russia. Second, even if there is a hypothetical possibility that the Abhkazian section of the railway will be reactivated in future, the Iran- Armenian motorway that will have been built by that time will make the Iran- Armenia railway absolutely unnecessary in view of its short mileage.  The third, most important factor is the Astara-Resht- Kazvin railway project implemented by the Russian Railways to link the operating railways of Russia, Azerbaijan, and Iran. That project is part of the North-South international transport corridor that will integrate the transport routes and information highways of Russia, Azerbaijan, Iran, India and Oman.  The analysts say the Iran- Armenia project is politically motivated. Therefore, the sides have not managed to set it in motion within the last 3 years.  The statements by Armenian officials claiming that China may invest in the project as part of its ambitions plan to restore the great Silk Road (cost $40 billion) do not stand up to criticism either. Armenia is not mentioned in any of the new Silk Road scenarios, unlike the Iran-Azerbaijan and Turkey-Georgia railways.  Relatively recently, the transport minister of Iran voiced quite promising projects of railway communication with the countries in the region, but Armenia was not mentioned in any of those projects.