Political or economic project

Nino ArveladZe

Enabling of Baku-Kars-Akhalkalaki trunk-railway becomes a subject of experts’ discussion.

Who schedules 196 km railway section repairing and what pieces of advice experts give? Several consider the presumable credit volume as insufficient for enabling of the railway, talking about the difficult natural conditions at the Akhalkalaki section. How should the Europe and Asia linking project create into a source of fixed incomes for Georgia, what sum will be needed for this goal achieving and whether it is possible to introduce positive changes in the country’s economy without a considerable growth in the cargo volume? Experts appreciate the new trunk-railway, but have doubts concerning the possibility of its rehabilitation. We interviewed the Deputy Director General for Strategic Development Issues of Ltd “Georgian Railway” – Mr. Nika Abuashvili:
– What is the current condition at Biukia_ Siviki-Tbilisi section, what is its cargo carrying capacity, the train speed and whether this section is a dual-track one?
– Our main trunk-railway passes from Azerbaijan border, i.e. Gardabani, in the direction of Tbilisi and Batumi. There is a dual-track railway from Gardabani to Samtredia, except for a small section of the pass where there is a one-track one, while the railway from Samtredia to Batumi and Samtredia has one track in each direction.
– What is the cargo carrying capacity?
– In 2006 the volume of our traffic will exceed 22 million tons and there is also a reserve of several millions. Each ought to just recognize that attraction of cargoes to our corridor is not dependent only on the will of the Georgian railway, Azerbaijan’s railway, the infrastructure of both shores of the Caspian Sea and the condition on the inner side of the Black Sea nearing huge importance also.
– Governmental session approved Kars- Akhalkalaki railway new project and there is no doubt that it is a century project. What is the final resolution– will a new track be laid at this section or reconstruction of the old one will be carried out?
– This project is under discussing for long time already. In 2005 the presidents of Georgia, Azerbaijan and Turkey pointed out that it was an interesting projects and that it ought to be implemented. Starting from 2005, after coming of the new management, we have been actively shared into the project. It should be mentioned that rather difficult negotiations have been held.
– What is implied by “difficult negotiations”?
– We are certainly friendly state, but each cares about his own country. However, after one and a half year-long negotiations, in which almost all levels were involved – the presidents of Azerbaijan and Georgia, the Prime-Minister, the Ministry of Economy, the Railway Department, the matter was carried to a logical conclusion. The matter concerns the Kars-Akhalkalaki-Baku section, it is a new railway line that implies rehabilitation-reconstruction of the existing Marabda-Akhalkalaki railway a construction of a completely new one from Akhalkalaki to Kars.
– You mean that the sliding rocks and the slope of the relief taken into account and will a new railway be laid there?
– The following is envisaged (the matter concerns the Georgian section only): the one that will be the planner will work out a project that implies the construction of a new railway from the Georgian border – from Kartsakhi to Akhalkalaki and a station for changing of car tracks in Akhalkalaki. Turkey has a narrow-gage railroad of European type and we – a full gauge one that remained from the soviet period, i.e. our cars and locomotives have a broad wheel track and this station should be built with the purpose of solving of this problem.
– When will the issues related to financing be solved?
– The financing issues have not been finalized yet. New construction and rehabilitation at the Georgian section will be financed by Azerbaijani credits. The final volume of the credit has not been determined yet, everything depends on the sum necessary for the project’s implementation. According to our preliminary calculations, this sum will make up about 200 million USD, but there is a real chance of its increasing. In 1997-1998, from the viewpoint of the previous project, the sum made up 200 million USD, and if take into account the prices that existed then and the current ones that have considerably grown, it will make up more than 200 million USD.
– The Minister of Economy said the Azerbaijani part would allocate 300 million USD.
– According to the Minister of Economy, in reality the maximal cost of this project can make up 260-300 million USD, and the minimal one – 200 million USD.
– Has the volume of freight turnover after the completion of works at this section been calculated?
– As for the freight turnover, there is a technical-economic evaluation made by the Georgian part and, according to their forecasts, in the beginning it may make up 3-3.5 million tons, and after a number of years it will reach 12-15 million tons.
– How will it effect on our economy?
– This kind of calculations are a prerogative of the Ministry of Economy.
– Is it expected that the railway will be turned into a joint-stock company with the purpose of attraction of investors?
– If it happens, it will not concern Kars-Akhalkalaki since its scheme has already been determined and agreed upon.
– Are you a supporter of the idea that the Georgian railway should become a joint-stock company?
-I am actually a supporter of this idea and I believe that a joint-stock company will be the optimal organizational-legal form for the Georgian railway. I will add that turning into a joint-stock company does not imply privatization.
It should be pointed out that the last meeting concerning the Kars-Akhalkalaki project was the most fruitful one.
– As which party` s merit can it be considered?
– It is impossible to single out any of the parties, but the carried out works and summit meetings have had a great effect.
– When will the works on the new project start?
– Presumably, the works will start this year. If we enumerate them from the structural point of view, there are agreements at the governmental level and of them concerns the terms and principles of financing. Principal agreements on all issues have been reached, and now the matter concerns the technical ones, which needs time. However, according to the plan, the works should start this year.
– When, according to the plan, should the works be finished?
– They should be finished in 2010-2011.

We did an interview with experts, Mr. David Khinchagashvili and Mr. Boris Tsulukidze, concerning the same issues. In the past they used to work on a similar project, but the then authorities did not consider the construction of the trunk-railway as a priority and the project was not implemented.
-You worked on Kars-Akhalkalaki railway project and that it exists…
David Khinchagashvili:
– There is IDC company in which this project was elaborated, then the works were continued in “GeoEngineering” company, but the adopted variant belongs to “Saqtransproject”. Of course, a tender will be held, but the trunk-railway will be designed according to their project.
Boris Tsulukidze: – They are going to restore the railway, but the radiuses and inclinations will have to be changed. We have more than one project – the first one was elaborated in early 1990, the second one was made by “GeoEngineering” and the third – at the Chair of Bridges and Tunnels. Then “GeoEngineering” took an active part in it.
D. Kh.: – 7-8 tunnels were planned in the project elaborated by us. Currently rehabilitation of the railway and laying of a new one from Kartsakhi to Akhalkalaki having the length of 26 km is planned. There is no tunnel there and it can be said that the conditions are good and the section is a spread one, but it is followed by a tunnel on the Georgian-Turkish border.
– Can you briefly tell us where the terminal should be located and what it will include?
David Aladashvili: – Terminal is a large territory on which about 20 branch tracks should be located. Two or three trains will be able to enter it at one time and, after changing of car trucks, continue their way to Turkey by the narrow-gauge track. It also needs an oil terminal.
– They say that the terminal should be set up in Akhalkalaki.
B. Ts.: – Yes, in Turkey there are narrow-gauge tracks, while in our country – full gauge ones, so car trucks should be changed. Initially the matter concerned Kartsakhi, but there is a possibility of construction of a big railway station in Akhalkalaki and it was chosen for this reason.
– What sum can be necessary for the terminal’s construction?
B. Ts.: – It will be a large sum.
D. Kh.: – According to the calculations, in 1997 restoration of the railway and construction of the 26 km Kars-Akhalkalaki railway would have required about 280 million USD, and the expenses for the construction of a railway from Akhalkalaki to Marabda approximated to 700 USD.
– Can you name the exact rout you are speaking about?
D. Kh.: – Tbilisi-Marabda-Tetri Tskaro-Tsalka, then it descends from Paravani lake and goes up to Akhalkalaki.
– And what is the most difficult section?
D. Kh.: – Difficult sections are the territory of Paravan lake and Gedevani plateau after Tetri Tskaro.
– What do the difficulties imply?
D. Kh.: – At this section inclinations and turning radiuses do not comply with modern requirements. Initially Marabda-Akhalkalaki railway had military purposes, but no attention was paid to inclinations and turning radiuses, which are 200-meter ones, while, according to the modern requirements, railway cannot have a turning radius less than 600 meters. In winter period it was difficult for even two locomotives to carry one freight car at this section.
D.A.: – Under theses conditions the railway will not be able to transport more than 5 million tons of cargo.
– 5 million tons a year will not be significant for the country’s economy.
B. Ts.: – This railway has a political load as well. Of course, 5 million tons of cargo a year is insignificant. The Azerbaijani part says that it is able to cope with this volume alone.
D.A.: – Georgia must develop and it is developing. We should not think that there is only Russia. Logically, the railways leading to Russia will be restored and new additional lines will become necessary. Potentially, Russia will also become an investor of this new railway, since it is the way connecting Europe and Asia. 4 billion USD is not an exaggerated sum, let us remember how much the oil pipeline’s construction cost. The railway is always in motion and it will always bring in an income.
– According to the project elaborated by you, what is the volume of the cargo that can be transferred?
B. Ts.: – 50 million tons, and had variants made for that. First of all, a completely new railway should be laid.
D.A.: – A service yard and a terminal should have also been created. There were many variants of the project, but all details were reckoned in each of them.
– Why didn’t your project see the light of the day?
– An international tended was to be held in 1997-1998 and “GeoEngineering” company prepared a tender proposal, which included geological investigations, economic comparisons and various variants. During the same years “Kavkaztrans” and the Chair of Bridges and Tunnels also had their variants, i.e. the companies were working on the project, but, unfortunately, the tender was not held and, for the time being, the projects have remained on paper.
– Has anyone become interested in this project?
D. Kh.: – The project was submitted to the Railway Department and consideration of the projects of “GeoEngineering” and the Chair of Bridges and Tunnels took place at the Ministry of Transport.
B. Ts.: – Our project was recognized as the best one, but it was related to rather big sums and one of our tunnels would have been the longest one in Europe.
– What was the total cost of the project?
B. Ts.: – The total sum hovered average 4,5 billion USD.
D.A.: – However, according to the transportation prices that existed in that period, it was possible to cover the expenses and pay off the credits within 10-14 years, while compensation of expenses within 20 years is an ideal variant. It is an important project, since this railway will be used by Central Asia, Europe, and in future – by Russia and China. The country’s development itself will give rise to the necessity of building the tunnel, and this tunnel will tight the North and the South. It is a century project and is not dependent on one or two countries. No one will ask Armenia whether it wants this railway or not. Turkey is building a highway and a railway on Bosporus, it is a rich country and has an ability to implement many ideas. It invested money in the Bosporus project with the purpose of connection with Europe.
– Say the terminal has been built, but there arises a problem related to the service yard, since everything should be well-reckoned and there should not be any delays as it transfers cargoes to Europe and Asia. The fact that our tank-wagons and cars are out-of-date is not new. Laying of a technically new dual-track railway in the direction of Marabda-Akhalkalaki is another problem, otherwise we shall not be able to attract investors. Did the project envisage creation of a service yard, which would provide for an unhampered and fast movement of trains at difficult sections?
D. Kh.: – Of course, power supply sources, construction of new power stations and rehabilitation of the old ones, as well as the construction base were reckoned. The project also included traction calculations, there ought to be many stations and a rather big station was envisaged for a service yard in Gachiani.
B. Ts.: – Each station would have had a service yard, but it was planned to set up more spacious service yards in Gachiani and Kartsakhi.
D.A.: – Creation of a service yard is related to another problem – there are no specialists in Georgia, and the small number of specialists that we have are engaged in other matters. Construction of a railway requires various specialists. Another factor has an effect on the lack of specialists in this sphere – this year it was prohibited for the Georgian Technical University to admit new students.
– In your opinion, why there was no interest in your project before and why this issue has become relevant today?
D.A.: – Implementation of this project was also impeded by the construction of Baku-Ceyhan oil pipeline. From the economic point of view, the railway was more important for Georgia, but the political situation tipped the scales.
D. Kh.: – Yes, it was impeded by the oil pipeline, since no more international investments were made. One Turkish company applied to “GeoEngineering” with a proposal to jointly put up the project for a tender, but then the oil pipeline tipped the scales and now the railway issue is on the agenda again.
B. Ts.: – Now there is an investment and construction boom. The issue of rehabilitation of Marabda-Akhalkalaki railway, which is currently working to Tsalka only, and laying of the new one in the direction of Akhalkalaki-Kartsakhi has been raised. It turns out to be much cheaper, but its final result will be zero since, besides non-standard radiuses and inclinations, there is also a problem of sections, which are filled up with snow by strong winds in winter and their cleaning is a serious problem. The presumable volume of the credit will not eradicate all the obstacles.
– Probably they believe that launching of the main project and settling of the financial aspect will become possible gradually?
B. Ts.: – I would not rule out this opinion; when they see that a railway having great importance has been built, but is not really functioning, this issue can be put on the agenda again.
D.A.: – I guess that it is not a right decision, since no one knows considerations of the current investor, may be he will not agree with coming of some other investor. Now everything has a more political shade than an economic one.
– Is the Turkish railway able to transfer 50 million tons of cargo?
D.A.: Turkey has not developed the territory bordering upon our country, it has a different system of economic development and it always welcomes investments.
D. Kh.: Construction of the oil pipeline and the gas pipeline has shown that builders from foreign companies were hired in Georgia and Azerbaijan, while in Turkey construction was implemented by “Botash” company.
B. Ts.: The Turks are weak in railway construction, but they will take care of themselves. The matter concerns cargoes from Central Asia and China as well as the great importance of the project.
– In the Railway Department they declare that the initial cargo volume after enabling of the Kars-Akhalkalaki railway will make up 3-3,5 million tons and after a number of years it will reach 12-15 million tons.
B. Ts.: According to the existing parameters, the cargo volume will never exceed 5 million tons. The railway will be technically unable to transfer more – small turning radiuses, big inclinations and double traction will not give an opportunity of doing it.
D.A.: – If they calculate how much one hour of the railway’s standstill will cost and how million tons will be lost because of its stoppage, they will get a heavy loss.
B. Ts.: There is an impression that Georgia does not need this railway, mainly Turkey and Azerbaijan take interest in, and it looks as if Georgia cannot say no, since the country does not need the railway in this form.
– What was the most obvious obstacle during the work on the project?
B. Ts.: In view of difficult natural conditions, the biggest obstacle is the cost of the project. Selection of the rout was also difficult because of the naturally high inclinations.
D. Kh.: The conditions appear really hard, but there are also the track’s elements – we chose high track elements, it has to do with turning angles and inclinations. Therefore, many tunnels and bridges were planned there in order to make a competitive track that will be functioning for along period of time.
D.A.: Each project requires substantiation. It should be substantiated why a new terminal should be constructed and a new railway should be laid. The distance from Akhalkalaki to Kartsakhi makes up 27 km and laying of a railway is possible here, while rehabilitation means that it will be an auxiliary one that will work for construction of a new railway and, at the same time, it will transport up to 5 million tons of cargo.
– Is there a possibility that the railway’s functioning will be in danger of suspension after the completion of its construction?
D. Kh.: It is impossible to find a foreign insurance company that will insure a moving cargo under these conditions.
B. Ts.: It may not stop its functioning, but it will not have an economic effect without the necessary volume of cargo. Marabda-Akhalkalaki railway used to have strategic importance as well, but later on, in view of such problems as suspension of work in winter, high power consumption by electric locomotives, it lost its significance and was unable to continue its work with full load.
– So, the authority took a credit, got into debts and will not receive any income?
B. Ts.: They talk about covering of the credit from the profit.
D.A.: This idea can be carried to an absurdity, that is why it should be considered properly.
– What are the risks accompanying the project?
B. Ts.: The volume of 5 million tons of cargo does not represent any danger, but that of 50 million tons may jeopardize Georgian ports.
– Turkey does not have a satisfactory infrastructure either. You say that we shall not be able to transfer more than 5 million tons of cargo, maybe it is just a PR action?
D.A.: -The volume of 5 million tons of cargo cannot be PR. The fact that the given credit will not be sufficient can be proven by a simple example – how much is the construction of an apartment house in Saakadze square being carried out by “Center Point” company?
It is a century project, it has a lot of supporters and opponents. It is absolutely natural that the international completion here is a keen one, since they consider a project envisaging the construction of a railway tunnel from Morocco to Spain, by means of which Europe will be connected to Africa. The logistic vector of the world freight turnover is directed to Asia, Europe and the Caspian region bypassing Russia, but profitably. So , we shall continue the discussion concerning the century project and its` related economic problems.