Russia’s state-run railway, RZD, reported on Thursday a sharp increase in its capital investments in Armenia’s rail network which it began managing almost two years ago.
Shevket Shaydulin, the Russian chief executive of the network called the South Caucasus Railway (SCR), said RZD investments have totaled almost $80 million this year. He said nearly half of the sum was due to be invested in the SRC last year, under the terms of RZD’s long-term management contract with the Armenian government.
The agreement, signed in late 2007, committed the Russians to investing $230 million in Armenia during the first five years of operations and another $240 million in the following years. The government has repeatedly accused them of failing to honor this and other contractual obligations.
Transport and Communications Minister Gurgen Sargsian complained in March that only $11.5 million was invested in the SCR in 2009. In particular, he said, the Russian management failed to repair and replace rail tracks and purchase several new locomotives for the cash-strapped and disused railway.
Armenia -- Shevket Shaydulin, director general of the national railway company holds a news conference on December 24, 2009.
Speaking at a news conference, Shaydulin said the Russian side has already fulfilled 94 percent of its obligations and will have fully complied with the management contract by the end of next year. He also stressed that the SCR did not raise its tariffs in 2009 despite a surge in the electricity and fuel prices that took effect in April.
“We didn’t raise tariffs and shouldered the [increased] burden on the Armenian economy, in order to enable local entrepreneurs, small and medium-sized businesses to achieve proper results,” Shaydulin said, referring to the severe impact of the global economic crisis on the landlocked country.
The crisis is clearly the main reason why cargo shipments to and from Armenia substantially declined in the course of the year. But that was mostly compensated by a doubling of passenger and cargo rail traffic inside the country reported by the SCR.
Nonetheless, the company continued to suffer financial losses in 2009. Shaydulin said it may well have to raise its prices to reduce them in 2010. But he made clear that according to RZD projections, the SCR will remain loss-making at least until 2016.