Armenia amends loan agreement with EFSD to ensure procurements under Kajaran tunnel project

ArmInfo. On December 27, the Government of Armenia approved the proposal to sign Supplementary Agreement No. 1 to the Agreement between the Republic of Armenia and the Eurasian Development Bank on the provision of an investment loan in the amount of $ 200 million to finance the project from the funds of the Eurasian Fund for Stabilization and Development.

As stated in the explanatory note to the document, the agreement was  signed on July 26, 2024. On December 9, the corresponding bill was  adopted.

According to the project, it is planned to build a tunnel about 7 km  long and modernize a section of the M2  Yerevan-Yeraskh-Goris-MeghriIranian border road with a length of  about 4 km (entrance to the Kajaran tunnel - intersection of the  planned new section of the Sisian-Kajaran road).

For the needs of the project, it is planned to alienate about 160  land plots. The approximate implementation period of the work will be  about 6 years. The estimated cost of the planned construction works  (including VAT) is 144.6 billion drams (or about 369 million US  dollars).

It is planned that as a result of the project implementation the  existing route will be shortened by 14 kilometers, the average speed  of vehicles will reach 80 km/h, and the route of the Kajaran-Agarak  road will be shortened by approximately 40 minutes. According to the  terms of the loan, the interest rate is set at 4% per annum, the  repayment period is 20 years, 5 of which are a grace period. 

However, as noted in the current resolution of the Cabinet of  Ministers, at the present stage it became necessary to amend the  Agreement, which is due to the fact that in order to ensure author's  control during construction, the Project provides consulting services  that are allowed to be carried out only by the organization  (hereinafter referred to as the Designer) that has developed the  detailed design. At the same time, the Agreement does not provide for  a procedure for conducting a non-competitive selection of a  consultant, which will ensure the possibility of concluding a  copyright agreement with the Designer.

In this regard, an addition on the non-competitive selection of  procurement procedures of the EFSR is being introduced into the draft  additional agreement to the Agreement.

is one of the largest projects 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. In general, the road  corridor program, which was planned to be completed within 4-5 years  (the start was given on September 13, 2012), spending less than $ 1  billion, as of May of this year. was implemented by 10%, and the  amount of loans attracted at the end of May 2024 amounted to $800.7  million. On November 6, in the National Assembly, Deputy Minister of  Territorial Administration and Infrastructure of the Republic of  Armenia Kristine Galechyan stated that Armenia intends to spend $1.3  billion in loan funds on the construction of the southern section of  the North-South road corridor investment program alone.