The Asian Development Bank (ADB) has extended the implementation period of the Azerbaijan Railway Sector Development Project with a total cost of $331 million by 2.5 years until the end of 2024, Report informs with reference to the audited financial statements of the project based on the results of 2022.
The project will rehabilitate about 333 kilometers of the main track from Sumgayit to Yalama, including building structures and level crossings, and develop a phased strategy for improving other key railway facilities, such as electrification, signaling and telecommunications, to complete the upgrade of the Yalama-Astara section of the North-South railway corridor.
To help Azerbaijan Railways CJSC improve rail connectivity and create financially viable rail operations, the Government of Azerbaijan entered into a $150 million loan agreement with ADB on December 19, 2017. This represents 45.32% of the total project cost
Also, on March 11, 2019, Azerbaijan entered into a loan agreement with the French Development Agency (AFD) for 93.159 million euros ($105 million). This agreement expired at the end of 2022. AFD funds account for 31.72% of the project cost.
The share of participation of the Azerbaijani Government in the project is $76 million (22.96% of the project cost). With these funds, it plans to cover the costs of paying all taxes and fees associated with the project.
“The expected economic benefits are mainly related to the increase in freight traffic along the Baku-Yalama railway line and, more broadly, between South Asia and Russia through Azerbaijan, since rail transport will be much easier than transit through the Caspian Sea or the Suez Canal. The number of passengers will also increase.
This railway will also be efficient in terms of environmental, climate and safety impacts. The technical assistance component will improve the overall management of Azerbaijan Railways CJSC and its operational capacity. Azerbaijan Railways will move towards becoming an efficient, economically and financially viable public company managed by a coherent and stable institutional structure,” notes ADB.
With a population of ten million people and an area of 86,600 km2, Azerbaijan has just over 2,000 km of railway lines, the bank emphasizes. The railway infrastructure built during the Soviet era has fallen into disrepair.
This situation negatively affects the safety of both railway workers and passengers, as well as the energy efficiency and competitiveness of the industry, says the bank in the report.