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Jun 04, 2008

South Caucasus Railways starts managing Armenian Railways under concession agreement.

South Caucasus Railways (SCR) has officially started business operations under a concession agreement to manage Armenian Railways.

In this connection, by 1 June 2008, SCR, a wholly-owned subsidiary of Russian Railways, received property owned by Armenian Railways consisting of 2,000 freight cars, 58 passenger coaches, 85 locomotives and 30 electric trains. All 4,300 employees employed by Armenian Railways have retained their jobs.

The concession agreement was concluded for 30 years, with a right of extension for another 20 years after the first 20 years of operation.

Under the agreement, Russian Railways will invest USD400 million in infrastructure at Armenian Railways and another USD170 million to upgrade its rolling stock.

For Russian Railways, the concessionary management represents a solid cargo base consisting of building materials, cement, food and mining raw materials, such as copper pyrites, while for Armenian Railways, large-scale modernisation can begin.

The management of SCR believes that the main task of Russian Railways is to bring Armenian Railways into line with Russian regulatory standards for maintaining infrastructure and rolling stock. SCR’s plans included the restoration of the railway roadbed, upgrading rolling stock, improving and constructing communications systems, gradually increasing the speed of trains, improving service conditions for both cargo and passengers, and training and retraining.

In the first instance, routes will be upgraded which account for 80% of all freight transport on SCR. Thus, SCR plans to build railway lines between Yerevan and Batumi and between Yerevan and Poti in the near future.

According to preliminary data, freight traffic at SCR is expected to increase to up to 30 million tons per annum. The Company plans to promote cooperation with Georgia, Azerbaijan, Turkey, Ukraine and other countries.

The concessionary management which Russian Railways has assumed is also a step towards preserving the unity and enhancing the competitiveness of the space where the 1520mm broad-gauge track is used.

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