Wednesday, December 12, 2007

Russians Set To Take Over Armenian Railway

Tuesday 11, December 2007, Armenia
By Ruben Meloyan

The director general of Armenia’s rail network on Tuesday effectively confirmed its impending takeover by Russia’s state-run railway, a deal which will place yet another chunk of the Armenian economic infrastructure under Russian control.

The Armenian government called last year an international tender for the exclusive right to manage the struggling network for at least 30 years. Only the Russian railway and an Indian firm showed interest in the bidding, sending relevant proposals to Yerevan earlier this year.

The Indians pulled out of the tender last month, all but predetermining its outcome. Armenian media had for months claimed that the contest is a mere formality as the state-owned Armenian Railway’s handover to the Russians was decided by Presidents Vladimir Putin and Robert Kocharian in Moscow last January.

The Armenian Railway chief, Ararat Khrimian, told RFE/RL that the tender’s winner will be officially announced “after January 2008.” He said Russian management of his company would be “natural and correct” given that it used to be part of the Soviet Union’s vast rail network.

“It’s easier to work with a company of which used to be a part than with others,” said Khrimian. “In my view, it will be easy and beneficial for us to work with the Russians.”

The impending deal is certain to be criticized by those government critics who believe that Russia’s growing economic presence in Armenia is turning into a stranglehold. Russian firms already dominate the Armenian energy and telecommunication sectors and are keen to acquire other industries. One of them is understood to have effectively purchased recently Armenia’s largest gold mining company from an Indian operator that fell foul of the authorities in Yerevan in January.

But according to Khrimian, more important is the fact that the new railway manager will have to invest at least $170 million in the Soviet-era network that has been operating at a fraction of its capacity ever since Armenia’s rail communication with the outside world was disrupted in 1992.

“Working in these blockade conditions, we have been unable to generate sufficient revenues to make capital investments in our train fleet and other infrastructure,” said Khrimian. “The investments will considerably improve the condition of our railway,” he added.

Note: Above are excerpts from the article. The full article appears here. Clarifications and comments by me are contained in {}. Deletions are marked by [...]. The bold emphasis is mine.



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