New prospects for the South Caucasian railway corridor
19 December, 2013
New prospects for the South Caucasian railway corridor

The South Caucasian railway transit corridor is expected to become more competitive after transportation tariffs are streamlined in all participant countries. Modernization of Georgian Railway (GR) now underway is expected to triple cargo turnover, adding allure to a route connecting Middle Asia and Europe for thousands of years.

A few weeks ago, an agreement on the TransCaspian International Transit Route Development was signed in Astana, the capital of Kazakhstan, Konstantine Guntsadze, Chairperson of Georgian Railway JSC, said to media on
6 December; accordingly, a coordinating committee staffed by representatives of Corridor countries such as Georgia, Azerbaijan and Kazakhstan will be set up soon.
It will seek to remove administrative barriers along the route, streamline transportation tariffs, and update infrastructure, with an expectation to enhance the competitive power of the Corridor and boost cargo turnover.
“Three key factors such as the Corridor’s economy, obsolete infrastructure and administrative barriers are hampering development of the South Caucasian railway route today,” Guntsadze said.
The Corridor’s seven key players are: the Kazakh railway, Kazakh Actau Port, Caspian Marine Lines, Baku Port infrastructure, Azeri Railway, GR, and the Black Sea Port infrastructure. It is an open secret that these players have been negotiating the unified transit/transportation tariff issue for more than ten years, but no practical consensus has been reached until this agreement in Astana.
In past, Corridor players have accused each other of jacking up transit fees, which was convenient for Russian Railway, a competitor covering a much more extensive territory; it has no state and administrative borders on the entire route, and offers just one tariff, which suits freight carriers much better.
As Guntsadze said in an interview with Georgian Journal, now all South Caucasian Corridor member countries realize that the Corridor will not be competitive without a liberalized transit policy and joint efforts. Therefore, in Astana, they decided to establish a one-stop unified tariff window that will cover freight shipping from Kazakhstan to Europe. And the removal of administrative barriers will insure speed and safety for cargo shipment.
“Three key issues are important for cargo shipping: speed, price, and safety, and we will be working on them to develop the South Caucasian Corridor and make it more competitive,” Guntsadze said.
The modernization of GR, a fully state owned enterprise, is also part of the entire South Caucasian Corridor development. The project is assessed at 270 million Swiss Francs and aims to double and gradually triple cargo turnover from the current 27 million tons per year by 2017, when the project will be completed.
A second tunnel will be built on Zvare-Kvishkheti passage, the system’s most problematic and congested juncture, which is anticipated to increase cargo turnover to 60 million tons per year; and after an auto-blocking mechanism is installed on the point, the turnover is expected to go as high as 100 million tons per year.
“And the key positive feature of this modernization is that once the project is through, the issue of cargo turnover capacity will not be raised at GR for 50-60 years,” Guntsadze said.


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