Armenia’s plan to replace the railway operator is insufficiently developed and risks destabilizing a system built over two decades, Russia’s security chief said.
Yerevan’s plan to change the manager of Armenia’s railway is not sufficiently elaborated, and the system formed over the years could “collapse instantly,” Russian Security Council Secretary Sergei Shoigu said.
“I am not going to assess the capabilities of other states in managing railway infrastructure, but I can confidently say that it is unlikely any other company could fully replace the Russian railway operator, which has been working effectively in Armenia for many years under not the easiest conditions,” Shoigu said, according to TASS.
He recalled that he had recently commented on the situation related to cooperation programs between Armenia and the U.S. in the nuclear sector.
“Thus, will such, diplomatically speaking, poorly developed decisions not lead to equally dangerous experiments for which ordinary Armenian citizens will have to pay? A system built over nearly two decades could simply collapse instantly. Naturally, no ‘friendly country’ would bear responsibility for that. I hope that when making responsible decisions, Armenia’s leadership will be guided exclusively by the interests of its citizens,” he said.
The Russian Security Council Secretary stressed that for nearly two decades South Caucasus Railway CJSC has conscientiously fulfilled the provisions of the concession agreement, including its investment obligations. According to him, during that period the total volume of Russian investments in Armenia’s railway system, including modernization of rolling stock, exceeded 30 billion rubles.
“And now Nikol Pashinyan says that the fact that Armenia’s railways are under concession to a Russian company deters potential partners, hampers regional projects, and he is considering transferring management of the Armenian railway network to a country that maintains friendly relations with both Russia and Armenia,” Shoigu noted.
He drew attention to the fact that the current agreement grants South Caucasus Railway CJSC, as concessionaire, the authority to possess, use, manage, operate, maintain, repair and carry out necessary improvements of the concession assets.
“For reference, when signing the contract, the Russian side assumed responsibility for more than 1,200 real estate concession assets and over 12,500 movable property items within Armenia’s railway system,” the Russian Security Council Secretary said.
According to Shoigu, over two decades of implementing the concession agreement, more than 15 billion rubles in tax revenues have been paid into Armenia’s state budget. In addition, more than 520 km of railway track have been repaired, while the operational length of the network managed by South Caucasus Railway CJSC is about 700 km.
“Fifty percent of sleepers have been replaced, and more than 50 structures have been repaired and reconstructed, including 38 bridges and two tunnels. If we look at statistics over two years, the picture is as follows: on average, South Caucasus Railway CJSC transports more than 500,000 passengers annually (about 360,000 of them in local traffic) and more than 1.6 million tons of cargo,” he added.
He said the company’s contribution to the republic’s economy is hard to overestimate: all vital goods for Armenia’s needs are transported by South Caucasus Railway CJSC.
“The railway also has strategic importance, ensuring transport connectivity for a landlocked country. Behind all this stand people — the company’s employees. Today, the company provides employment for more than 2,500 people. Incidentally, almost all of them are residents and citizens of Armenia who receive all necessary social payments,” Shoigu said.
The Russian Security Council Secretary also noted that when assessing discussions around the concession, it is necessary to remember the history and legal nuances of the issue.
“After the collapse of the USSR, Armenia’s railway system was in an extremely severe crisis. The infrastructure was heavily worn out, and many sections of track were not functioning due to collapses and landslides. Given that the republic’s territory was almost under blockade, freight volumes and passenger numbers sharply declined. Serious financial investments were needed for modernization, including renewal of outdated rolling stock. Under these conditions, the Armenian government announced a tender for the restoration of the railway, which was won by Russia.
In February 2008, a concession agreement was signed between Russian Railways OJSC and South Caucasus Railway CJSC (a specially established subsidiary of Russian Railways OJSC) to transfer Armenia’s railway system to South Caucasus Railway CJSC under concession until 2038,” Shoigu said.
Armenian Prime Minister Nikol Pashinyan has proposed to the Russian side to discuss the possibility of selling the concession right to operate the country’s railways to one of the states that maintain friendly relations with both Moscow and Yerevan. Among the possible options, he mentioned Kazakhstan, the United Arab Emirates and Qatar.
At the same time, Pashinyan stated that Armenia has no objections to the Russian Federation, but that the current Russian concession creates “certain competitive losses” for the country.
