North-South Highway/Iran-Armenia Railway

[Mher]

Re: North-South Highway/Iran-Armenia Railway

Russian Owner Keen To Sell Armenian Power Utility

Sargis Harutyunyan
Հրապարակված է՝ 13.05.2015

A Russian energy conglomerate plans to sell Armenia’s loss-making national electricity distribution company owned by it, Energy and Natural Resources Minister Yervand Zakharian confirmed on Wednesday.

A subsidiary of the state-run RAO Unified Energy Systems (UES) purchased the Electricity Networks of Armenia (ENA) utility from a British-registered firm in 2006. The $73 million takeover solidified Russia’s strong presence in the Armenian energy sector.

The ENA absorbed capital investments from its new owner and remained profitable until 2011. However, the network has since been making losses, resulting in an estimated $220 million in outstanding debts to Armenian commercial banks and power plants.

The Yerevan daily “Haykakan Zhamanak” reported last month that the UES is poised to sell its troubled Armenian subsidiary to the Tashir Group of Samvel Karapetian, an Armenian-born billionaire based in Russia. Karapetian’s brother Karen, who is a member of the Armenian parliament, did not explicitly deny the report in a special statement issued earlier this week.

Zakharian similarly did not rule out the possibility of such a takeover. “I won’t refute or confirm that,” he told a news conference.

Zakharian said the UES is indeed keen to sell at least a part of the ENA to another investor. But he did not go into details.

The minister accused the Russians of mismanaging the ENA. He said “the inefficient work of the company management” is one of the reasons why the Armenian power utility posted 37.6 billion drams ($78 million) in losses over the past three years in addition to its massive debts. “The losses result from theft, outdated equipment, [poor] quality of exploitation, and insufficient diligence of personnel,” he said.

Citing the need to end the losses, the ENA last week asked Armenia’s Public Services Regulatory Commission (PRSC) to allow it to raise its daytime electricity price for households by as much as 40 percent.

While criticizing the ENA management, Zakharian said a higher energy tariff would be justified. He dismissed suggestions that ordinary Armenians are effectively forced to pay for the company’s mismanagement.

The minister also said it is only natural that electricity is more expensive in Armenia than in Russia. “Armenia is not a transit country for gas or oil and it has no energy resources of its own,” he argued. “Why do you compare our [energy] tariffs with those of Russia?”

http://www.azatutyun.am/content/article/27014518.html

The ideal situation will be for the infrastructure to be sold to an Armenian. If that's not possible, the second best option will be for a Chinese or US private buyer, which can further reduce the total monopoly that Russia has in ownership in Armenian infrastructure. While foreign ownership is never desirable, at the very least the Armenian government should make sure the foreign ownership should be private non state entities and as diversified as possible between competing powers, as to ensure no single foreign government has significant control of key infrastructure.

[Mher]

Re: North-South Highway/Iran-Armenia Railway

Part of Armenian North-South Highway to Be Commissioned This Year

YEREVAN (Arka)—The Artashat-Ashtarak section of the North-South transport corridor will be commissioned before the end of this year, Armenian Deputy Transport and Communications Minister Arthur Arakelian said Friday in the National Assembly.

“Concrete lining of the 31-kilometer Artashat-Ashtarak section of North-South motorway is already completed, and now testing procedures as well as construction of road facilities and infrastructure have started,” he said at a parliamentary hearing.

According to Arakelian, four more such sections remain to be completed.

Arakelian also added that negotiations are underway with Iran to build a similar road, which will be connected to the North-South highway.

Arakelyan said that the first tranche of the contractual cost of the first section of the highway amounts to $70.4 million, of which $60 million will be provided by the Asian Development Bank.

The Armenian government approved January 14, 2010 the investment program to build the North-South transport corridor, as well as a $500 million framework loan agreement with the Asian Development Bank.

According to Armenian officials, the cost of building the North-South transport corridor is estimated at $ 1.5 billion.

Currently two sections of the road are being built; one stretches from Artashat to Ashtarak and the second from Ashtarak to Talin.

About 3,000 new jobs will be created for completing the construction of the North-South transport corridor in Armenia, Deputy Minister of Economy Garegin Melkonyan told a parliamentary discussion on the project.

The transport corridor will stretch from the southern Armenian town of Meghri, on the border with Iran, to Bavra in the north on the border with Georgia. The North-South transport corridor will enable Armenia to mitigate the effects of the blockade imposed by Azerbaijan and Turkey.

According to Armenian officials, the cost of building the North-South transport corridor is estimated at $1.5 billion.

http://asbarez.com/blog/archives/136129

[Mher]

Re: North-South Highway/Iran-Armenia Railway

Russian Official Against Iran-Armenia Rail Link


Հրապարակված է՝ 09.06.2015

The influential head of Russia’s state-run rail network has spoken out against the construction of a railway connecting Armenia with neighboring Iran, saying that it would not be commercially viable.

According to the Arminfo news agency, Vladimir Yakunin compared at the weekend the ambitious project worth an estimated $3 billion with “cutting through a window in the wall leading nowhere … to the wall of the adjacent house.” Yakunin, whose RZhD network manages Armenia’s national railway company, said chances for its implementation are therefore nil.

Yakunin, who is widely regarded as a member of Russian President Vladimir Putin’s entourage, described the project as “realistic” as recently as three years ago, during a visit to Armenia.

The Armenian and Iranian governments officially approved it in 2009. But they have still not found concrete sources of funding for the 470-kilometer rail link that would mainly pass through Armenian territory.

The Armenian side has repeatedly expressed hope that Russian firms will participate in the railway construction and partly finance it. The Russian government and RZhD have not ruled out such a possibility before Yakunin’s remarks cited by Arminfo.

President Serzh Sarkisian called for China’s “active” involvement in the project when he visited Beijing in March. He said that the Armenia-Iran railway could be part of a transnational “Silk Road economic zone” which China would like to create along a vast geographic area.

The China Communications Construction Company (CCCC) has already conducted a feasibility study and recommended a cost-effective route for the rail link.

The study was commissioned in 2013 by the Dubai-based company Rasia that had in turn a received 30-year Armenian government concession to build and manage the 305-kilometer Armenian section of the railway. Earlier this year, Armenia’s Deputy Transport Minister Artur Arakelian said that Rasia has been holding “very active negotiations” with unnamed Chinese investors.

Visiting Yerevan in January, Iran’s Foreign Minister Mohammad Javad Zarif spoke of further progress made towards the construction of the railway. “There have been very good trilateral discussions and we hope that [the project] will quickly move forward,” Zarif said without elaborating.

http://www.azatutyun.am/content/article/27062793.html

This isn't all that surprising to me. Considering the narrow hellish path it has follow in Syunik, the railway itself can never return the investment it requires. However on national scale, how it'll improve security and relations with Iran and Russia, how it'll improve business, investment, and growth, specially in the outer regions, it will have a 10X return on the investment. That's why it would be so valuable if we had the funding to fund it ourselves instead of waiting for a handout from foreign banks and nations

[Federate]

Re: North-South Highway/Iran-Armenia Railway

Russian Official Against Iran-Armenia Rail Link


Հրապարակված է՝ 09.06.2015

The influential head of Russia’s state-run rail network has spoken out against the construction of a railway connecting Armenia with neighboring Iran, saying that it would not be commercially viable.

According to the Arminfo news agency, Vladimir Yakunin compared at the weekend the ambitious project worth an estimated $3 billion with “cutting through a window in the wall leading nowhere … to the wall of the adjacent house.” Yakunin, whose RZhD network manages Armenia’s national railway company, said chances for its implementation are therefore nil.

Yakunin, who is widely regarded as a member of Russian President Vladimir Putin’s entourage, described the project as “realistic” as recently as three years ago, during a visit to Armenia.

The Armenian and Iranian governments officially approved it in 2009. But they have still not found concrete sources of funding for the 470-kilometer rail link that would mainly pass through Armenian territory.

The Armenian side has repeatedly expressed hope that Russian firms will participate in the railway construction and partly finance it. The Russian government and RZhD have not ruled out such a possibility before Yakunin’s remarks cited by Arminfo.

President Serzh Sarkisian called for China’s “active” involvement in the project when he visited Beijing in March. He said that the Armenia-Iran railway could be part of a transnational “Silk Road economic zone” which China would like to create along a vast geographic area.

The China Communications Construction Company (CCCC) has already conducted a feasibility study and recommended a cost-effective route for the rail link.

The study was commissioned in 2013 by the Dubai-based company Rasia that had in turn a received 30-year Armenian government concession to build and manage the 305-kilometer Armenian section of the railway. Earlier this year, Armenia’s Deputy Transport Minister Artur Arakelian said that Rasia has been holding “very active negotiations” with unnamed Chinese investors.

Visiting Yerevan in January, Iran’s Foreign Minister Mohammad Javad Zarif spoke of further progress made towards the construction of the railway. “There have been very good trilateral discussions and we hope that [the project] will quickly move forward,” Zarif said without elaborating.

http://www.azatutyun.am/content/article/27062793.html

This isn't all that surprising to me. Considering the narrow hellish path it has follow in Syunik, the railway itself can never return the investment it requires. However on national scale, how it'll improve security and relations with Iran and Russia, how it'll improve business, investment, and growth, specially in the outer regions, it will have a 10X return on the investment. That's why it would be so valuable if we had the funding to fund it ourselves instead of waiting for a handout from foreign banks and nations

All these Armenian millionaires and billionaires building ugly and/or useless churches which bring no returns on their investment except boosting their egos should be funding this.

[Shant03]

Re: North-South Highway/Iran-Armenia Railway

I wouldn't call an armenian church ugly, but I do agree money can be spent more efficiently. Maybe the diaspora can pay for a chunk of it to entice foreign investors?

[Mher]

Re: North-South Highway/Iran-Armenia Railway

I wouldn't call an armenian church ugly, but I do agree money can be spent more efficiently. Maybe the diaspora can pay for a chunk of it to entice foreign investors?

The problem is the massive size of the necessary investment. We are talking about over 3 billion dollars. In its twenty years of existence, ArmeniaFund has managed to collect 250 million dollars in total. So doing so collectively through ordinary individuals will be close to impossible. I think the only way it could happen through the Diaspora would be through a few extremely wealthy individuals who could attract funding from fellow super rich businessmen. Even that seems difficult for many reasons, with the first being the uncertainty in regards to financial profit.

And to think how easily Aliyev burns through a few billion dollars annually just on his idiotic pet projects that make zero economic sense. With just ten billion dollars to invest in key infrastructure we would probably see at least a doubling or tripling of our GDP

[londontsi]

Re: North-South Highway/Iran-Armenia Railway

The problem is the massive size of the necessary investment. We are talking about over 3 billion dollars. In its twenty years of existence, ArmeniaFund has managed to collect 250 million dollars in total. So doing so collectively through ordinary individuals will be close to impossible. I think the only way it could happen through the Diaspora would be through a few extremely wealthy individuals who could attract funding from fellow super rich businessmen. Even that seems difficult for many reasons, with the first being the uncertainty in regards to financial profit.

And to think how easily Aliyev burns through a few billion dollars annually just on his idiotic pet projects that make zero economic sense. With just ten billion dollars to invest in key infrastructure we would probably see at least a doubling or tripling of our GDP

Repayment of Projects of this nature and size should be seen as long term obligation.

Not 20 years but more like 50 years if not 100 years.
A 100 year loan could make things manageable, roughly
(Repayment of $300) + (a low interest)+ (Maintenance) against (Toll charges) + (a variable subsidy)

If you consider its strategic significance both to the economy and geopolitics you start having the grounding for making a case.

Russians may not be too enthusiastic because they already have access to a North South route through Azerbaijan.

Geopolitically it would be appealing to Iran and Georgia as alternative to Azerbaijan.

It could also have an appeal to Russia all eventualities considered.

Financing would be difficult.

Do not think all Armenian effort would be viable both financially as well as administratively.
Do not think such money ( as a single investment) or trust exists.

Middle eastern sources have already show interest by spending substantial amounts to conduct a feasibility studies.
Asian Banks, Chinese money, Iran, Russia could be sources.
The Western entities might participate if they see any anti Russian slant to the whole picture.

The counter argument will be what else could we have done with such a vast amount ..... if the funds were available.

.

[Haykakan]

Re: North-South Highway/Iran-Armenia Railway

londontsi raises a good point in the form of opportunity cost. Perhaps there is a better way to use that much money if we get it. I think Iran, Georgia, and Russia would all benefit from this project also thus they should also pitch in.

[Mher]

Re: North-South Highway/Iran-Armenia Railway

Minister Rejects Russian Skepticism Over Iran-Armenia Railway

Sargis Harutyunyan

Հրապարակված է՝ 11.06.2015

Transport and Communications Minister Gagik Beglarian dismissed on Thursday a senior Russian official’s objections to the Armenian government’s long-standing plans to build a railway connecting Armenia to neighboring Iran.

Vladimir Yakunin, the influential head of Russia’s state-run rail network RZhD, said at the weekend that that the ambitious project is not economically viable. He compared it to “cutting through a window in the wall leading nowhere.”

“That is Mr. Yakunin’s subjective opinion which has nothing to do with reality,” Beglarian told RFE/RL’s Armenian service (Azatutyun.am). “But I can understand him. That statement stems from the interests of the company headed by him.”

Beglarian would not say why he thinks RZhD is disinterested in the Iran-Armenia rail link. “That project is very important for our state and people,” he said instead, adding that the Armenian government will press ahead with its implementation.

Yakunin called the project “realistic” when he visited Armenia in 2012.

Shortly after taking office in April 2008, President Serzh Sarkisian promised that work on the railway will start “in the coming years.” However, his government has still not attracted an estimated $3 billion in investments needed for building its 305-kilometer Armenian section. The figure is roughly equivalent to Armenia’s entire state budget.

Accordingly, the government has been vague about possible dates for the start of the railway’s construction. Prime Minister Hovik Abrahamian seemed to have added his voice to domestic skepticism about the project during a cabinet meeting in February.

“Mr. Beglarian, is there any hope on this issue?” Abrahamian asked the transport minister. “We are working on the project’s implementation,” replied Beglarian.

The planned railway would not only facilitate Armenian-Iranian trade but also make it much easier for Armenia to use Iranian territory for import and export operations with other nations and China in particular. Much of Armenian-Chinese trade, which amounted to $590 million last year, is already carried out through Iran’s Persian Gulf ports.

The issue was reportedly high on the agenda of Sarkisian’s official visit to China in March. The Armenian president called for “active” Chinese involvement in the project.

http://www.azatutyun.am/content/article/27066948.html

[Haykakan]

Re: North-South Highway/Iran-Armenia Railway

You can see why Russia would turn a 180 on this issue as China tries to step in. The relations between China and Russia are very interesting as both need each other yet both also compete for regional influence. It will be very interesting to see how the relations between these nations evolve and how it will effect us.