North-South`s construction odyssey: Only 10% of road has been  completed in 12 years

ArmInfo.The North-South Road Corridor Investment Program, which was planned to be completed within  4-5 years, spending less than $1 billion, has been implemented by 10% to date, and the amount of loans attracted by the end of May 2024 amounted to $800.7 million. At the same time, after 12 years, those responsible for the project are afraid to talk about either the timing of its completion or its final cost.

Nevertheless, ArmInfo was informed about some of the work done and  the financing of the program by the Ministry of Territorial  Administration and Infrastructure (MTAI), as well as the Ministry of  Finance of the Republic of Armenia. And the situation turned out to  be too messy.

"North-South" is one of the largest programs in the history of  independent Armenia. This road will reduce the distance from the  Iranian border to the Georgian border from 556 to 490 kilometers. The  road will significantly facilitate access to the Black Sea not only  for Armenia, but also for Iran. However, the scale of the program in  no way correlates with the pace of its implementation by the Armenian  authorities - both former and current ones. In March 2009,  then  Minister of Transport and Communications of Armenia Gurgen Sargsyan  stated that the start of the program would be given in April 2009  after a decision was made on the winner or winners of the competition  announced by the Asian Development Bank. And despite the fact that in  February 2010, the Armenian parliament ratified the loan agreements  for receiving financial resources of 500 million dollars from the ADB  (out of the required 962 million dollars), the official start of the  program was given only on September 13, 2012. 

Then, at the ceremony of laying the first stone on the section of the  Yerevan-Ararat highway, the next head of the Minister of Transport  and Communication of Armenia  Gagik Beglaryan and other responsible  persons announced that the program was planned to be fully completed  in 2016-2017. Less than six months after the start, in February 2013,  the authorities revised the cost of the program to $1.5 billion. And  in September 2017, a new figure was announced by the new Minister of  Transport Vahan Martirosyan - the construction of the entire 556-  kilometer North-South highway will cost more than $2 billion, since,  according to preliminary estimates, its southern section alone,  between the cities of Artashat and Meghri, will require capital  investments in the amount of $1.5 billion.

Over the past period, the project's contractors, as well as  officials, have repeatedly become "heroes" of the crime chronicle -  they were accused of fraud on an especially large scale. As the  "revolutionary" head of the Cabinet of Ministers Nikol Pashinyan  stated at the end of 2018, " the project was completely looted and  stolen. And it's good that the project was not implemented, because  by not implementing it, corruption was prevented in the first place.  We have a political approach, and we are implementing it," he said.  Accordingly, the project completion dates were constantly revised. As  a result, as ArmInfo was told by the MTAI, 49.7 km of the road were  built during the 12-year period of implementing the North- South Road  Corridor Investment Program. In particular, the Yerevan-Ashtarak  (11.4 km) and Yerevan-Artashat (19.6 km) sections were commissioned  within the framework of Tranche-1, another 18.7 km were built within  the framework of Tranche-3 (Talin-Lanjik). 

Construction work is currently underway on the 8-kilometer Tranche 2  road, which bypasses the archaeological site of Agarak, the  34-kilometer Ashtarak-Talin section, as well as the 23-kilometer  Lanjik- Gyumri section (Tranche 3). Builders are also working on the  32-kilometer Kajaran-Agarak section within Tranche 4. Preparations  are underway for construction on the southernmost section of the road  (Agarak- Kajaran), where a contractor has already been selected. A  tender for the Kajaran tunnel will soon be announced, and work on the  construction of the tunnel (about 7 km long) and the reconstruction  of a 4- kilometer section of the existing M-2  Yerevan-Yeraskh-Goris-Meghri-Iranian border road is planned to begin  only in 2025.

Next year, it is also planned to begin construction of a new section  of the road with a length of about 60 km Sisian-Kajaran (including  the Bargushat tunnel) of the 4th Tranche of the North-South road  corridor. The work will be carried out in three sections: the  northern section - 27.12 km long; the Bargushat tunnel section, 8.65  km long and the southern section, 24.25 km long. A total of 708  million euros in loan funds will be required for the construction of  the three sections of the road section. The southern section is  planned to be implemented with joint financing from the EBRD and the  European Investment Bank (EIB).  

According to the initial plan  presented by the EBRD, the necessary loan funds to finance the  southern section amount to 373 million euros, of which 236 million  euros are planned to be attracted from the EBRD, and the remaining  137 million euros from the EIB. In total, as ArmInfo was told by the  Ministry of Finance, since the start of the program, Armenia has  attracted 800.74 million dollars for its implementation.  

Thus,  within the framework of Tranche 1 (Yerevan-Ashtarak, Yerevan-Artashat  road section), 38.44 million SDR and 50.65 million USD loan funds  were attracted from the Asian Development Bank (ADB).  (the deadline  for using the funds was June 30, 2017). Of the loan amount,  approximately 43 thousand US dollars has been cancelled. 57,061,749.4  US dollars were used from loan funds. The state co-financing totaled   about 10 million US dollars under the Tranche 1.

For the implementation of Tranche 2 (Ashtarak-Talin), ADB again  provided a loan of $170 million. As of May 23, 2024, $101,046,056.6  of this amount has been used (the deadline for using the funds is  December 31, 2024 ). The state co-financing amounted to about $40  million.

For Tranche 3 (Talin-Lanjik, Lanjik-Gyumri), ADB provided $100  million, $75,700,516.1 has been used (the deadline for using the  funds is December 31, 2024 ).), 60 million euros ($64.3 million) were  received from the European Investment Bank, 38,541,168.3 euros have  been used (the deadline for using the funds was December 29, 2024 ).  A grant of 6 million euros ($6.43 million in US dollars) was received  within the framework of the European Neighborhood and Partnership  Instrument (ENPI) (the deadline for using the funds was April 30,  2024), the same amount was received as a technical support grant;  9,317,247 euros were used. Co-financing of the Republic of Armenia  within this Tranche amounted to almost $50 million.  

For Tranche 4  (Artashat-Agarak road section), borrowed funds from the EDB (EFSD)  amounted to $150 million; $2,508,893.5 were used (the deadline for  using the funds is Dec 30, 2026). Armenia will attract another 236  million euros ($252.92 million) from the European Bank for  Reconstruction and Development (EBRD) (the deadline for using the  funds is May15, 2032). The agreement was signed on May 15 on the  sidelines of the 33rd annual meeting of the EBRD in Yerevan.  Co-financing of the RA within the Tranche 4 amounted to approximately  $131 million as of April 30 this year. According to the Ministry of  Finance, in the near future Armenia plans to attract financial  resources from a number of international partners.

Thus, an official  application has already been submitted for a loan from the European  Investment Bank - 236 million euros (loan) for the construction of a  section of the Sisian-Kajaran road (Northern and Southern sections).  On the same section (Northern sections), Armenia plans to finance the  work with a loan from the ADB (an official application has been  submitted for 236 million euros).  There is a preliminary agreement  with the Eurasian Fund for Stabilization and Development (EFSD) to  receive a $200 million loan for the construction of the Kajaran  tunnel. There is also a preliminary agreement with the French  Development Agency and the OPEC Fund for International Development to  attract funds (the amount is subject to specification) to finance the  construction of the Bargushat tunnel.  

How much more money will be  needed to finance the entire investment program, as well as when the  project can be completed, is an open question today. As the Minister  of Territorial Administration and Infrastructure of Armenia Gnel  Sanosyan previously told an ArmInfo correspondent, it is impossible  to estimate the cost of the entire program, since there are still  sections for which there is no design and estimate documentation yet.  In particular, there is still no project for the 170 km  Artashat-Sisian road.  "although there is an idea of how this road  will run". At the same time, MTAI asures that the active phase of the  project implementation will be in 2025-2030, which is not bad, at  least there is some certainty.