Pardon impossible to execute (comma matter): Iran-Armenia Railroad Project future unclear more and more

ArmInfo. The Direction on  Railway Construction  JSC under the Ministry of  Transport,  Communications and IT is  to be cancelled. A corresponding resolution   was approved at January 12 Government session. Meanwhile, according   to   Vahan Martirosyan, Armenian Minister of Transport,  Communications and IT, this will not affect the implementation of  Iran-Armenia Railway Project.

Following his wording, the cancellation of  JSC mentioned is  preconditioned with a purpose to optimize state authorities expenses.  In the result of 13 positions and 1  vehicle reduction the entity  plans to save an amount of AMD 35 mln.  in annual view. 

As Vahan Martirosyan clarified after the Government session, the  liquidation of the Direction on Railroad Construction does not mean  the rejection of the Iran-Armenia Project in all. "There is a Railway  Department existing under the Ministry, which can implement  appropriate functions," he mentioned.  Meanwhile, stating that the  negotiations to attract potential investors are in progress, the  minister did not mention any names or countries as prospective  participants of the project. " Appropriate works are  in progress,  but we all realize this project is not that easy one and  there are  separate efforts needed in respect to any given investor," he stated. 

Vahan  Martirosyan mentioned once again Armenian interest in the  implementation of this project.  Answering the question regarding  terms and feasibility of the railroad construction, as well as  regarding probability to stay off the project of regional importance,  Minister  noted: "I cannot state any definite terms of the  implementation, but I can say that the project is straight in the  focus of the Government attention.  What is to the project - yes, it  is highly desirable. And Iran-Armenia railroad is the shortest way to  the Black Sea for Iran."

It is remarkable, that the project which start has been announced yet  in 2012, is not completely shaped by now. According to the Minister,  for this moment, due to approximate assessment, the construction cost  makes USD 3,2 bln. "But this estimate is very broad brush, because we  do not have finally approved project and we are waiting for future  investors evaluations," he stated. 

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The  Direction under the MTCIT, which is  under cancellation now and  which annual  expenses formed AMD 35-37 mln annually, did not idle  time away. " The company kept holding negotiations with possible  investors, conducted discussions with concessional project manager  and estimations of tunnels and bridges needed. There is a lot of work  done,"  the Minister said.   

To remind, recently Armenia's Ministry of Transport, Communications  and IT has a business plan related to implementation of Iran-Armenia   railway construction program.

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. 

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 investments 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.