Sitting at a crossroads between the traditional North-South and, more importantly, East-West trade routes, Azerbaijan is working to develop itself into an integral part of the modern “Silk Road.” It is heavily investing in the development of its transport sector through rail, road, air, and maritime infrastructure. A sector of strategic importance for the country’s economy, it grew by 9.6% in 2011 according to figures released by the Ministry of Economic Development.
Azerbaijan is focusing on upgrading its transport network as part of several large regional and domestic projects, such as the integrated Transport Corridor Europe-Caucasus-Asia (TRACECA), which will strengthen Azerbaijan’s position as a regional transport hub and doorway between Europe and Asia. The figures, however, are already looking good. In 2011, 203.5 million tons of cargo were transported via Azerbaijan, an increase of 3.6% as compared to the previous year. Of this figure, 57.9% of cargo was oil and gas related, whereas 42.1% was dry cargo, a significant evolution from the 75%:25% ratio with which the country closed 2010, according to the State Statistical Committee of the Republic of Azerbaijan (Azstat). In 2011, 53.9 million tons of cargo were transported along TRACECA, often considered the modern Silk Road. This is up 4.3% over the previous year. Approximately 44% of cargo carried along the route went by road, 37% by rail, and 19% by sea. The annual cargo income from the route in 2011 reached $484.76 million, increasing from the $461.39 million recorded
The expansion of Heydar Aliyev International Airport and Baku’s sea port, along with other support infrastructure, will not only
contribute to efforts to boost capacity on the route, but to further attract tourists and increase the overall annual figure of passengers carried, which went up in 2011 by 7.5%, reaching 1.5 billion individual journeys. Of the overall number of passengers, 241.5 million travelled along the Europe-Caucasus-Asia corridor, which brought in $105.41 million in income in 2011, up from $61.21 million in 2010.
Azerbaijan invested $143 million in the development of its extensive rail network in 2011, which currently has 2,125 kilometers of railway, of which 1,278 kilometers are electrified. Azerbaijan’s railway network has 176 stations, two of which are completely automated, 12 have container courts, and three are able to service TEU containers. Overall, 22.1 million tons of cargo was carried by rail in 2011, representing 10.9% of the overall cargo transported.
Azerbaijan has train connections with Tbilisi, Georgia, Moscow and Rostov, Russia, and Kiev and Kharkov, Ukraine, as well as other major cities in the CIS region. Although international travel on the network is still low—317,000 people in 2010—the implementation of transnational mega projects like the Baku-Tbilisi-Kars (BTK) railway line will positively contribute to leveraging Azerbaijan’s rail capacities, in terms of both cargo and passengers, supporting a direct railway connection between Europe and Asia. The BTK project, included in the world’s top-100 large infrastructure projects, is in its final stage, with the first test trains set to roll by the end of 2012 or at the beginning of 2013. In total, 105 kilometers of new line will be built between Kars and Akhalkalaki, with 76 kilometers in Turkey and 29 kilometers in Georgia. The existing rail line from Akhalkalaki to Marabda and from Tbilisi to Baku will be modernized.
Azerbaijan is providing a loan to Georgia worth $750 million for the construction of the Georgian section of the project; the reconstruction and rehabilitation of the railway line between Marabda and Akhalkalaki; and the construction of a tunnel in the Akhalkalaki area, near the border with Turkey.
Once finished, it is estimated that more than 1 million passengers and 6.5 million tons of cargo will be transported via the BTK railway line annually, with a future estimated forecast of 17 million tons of cargo and approximately 3 million passengers by 2030. The government estimates that the BTK line will generate around $50 million a year, becoming a key segment in the “Silk Road” transport corridor.
Other investment lines the Ministry of Transport is following in this field include the upgrade of the locomotive fleet; in 2011 the Ministry purchased seven electric and diesel units, with the former set to be used in international and major inter-urban lines, and the latter in rural areas, which are still serviced by diesel-powered locomotives. Another is the expansion of the Baku Metro network, which currently covers 22 stations and 33 kilometers of track rail, and transported around 175 million passengers in 2011. The Ministry of Transport has developed a state program that envisages the construction of eight new stations and a new metro line to be finished by 2015, as well as the renewal of the fleet.
In 2011, the Ministry of Transport invested $2 billion in the maintenance of 668.7 kilometers of roads in the country, which boasts a network of over 21,600 kilometers in total. As of today, 68% of this network is in compliance with international standards. Azerbaijan’s main international traffic highways are the Baku-Alat-Ganja-Kazakh-Georgian Border corridor, a 503-kilometer road that represents the Azerbaijani section of the TRACECA corridor, and the so-called North-South Corridor that stretches out from the Russian to the Iranian border along 521 kilometers. These highways are the main arteries used in terms of cargo transport into, out of, and through Azerbaijan when it comes to cargo transportation by road. In total, some 109.8 million tons of cargo were transported by road in Azerbaijan over 2011. As part of the 2012-2015 investment program, the Ministry of Transport is planning to construct and repair 9,600 kilometers of roads by 2015, as J.G. Gurbanov, Chairman of Azeryolservis, told TBY. Gurbanov also pointed out the importance of the works carried out by both the European Bank for Reconstruction and Development (EBRD) and the Asian Development Bank (ADB), which have moved road infrastructure to the top of their agendas for the future. Some of the main projects lined up for 2012, in cooperation with both international organizations, are the 166-kilometer Mingachevir-Bahramtepe road, and the 99.2-kilometer Kurdamir-Ujar-Yeblakh state highway.
Another important development project within the road network is the implementation of a new Intelligent Transport Management System, the only one of its kind within the CIS region, which will allow the collection of a wide range of data from more than 1,612 streets and avenues, and 2,096 buses, through 378 units
of specific equipment and 320 kilometers of fiber-optic cable, in order to better facilitate road traffic in Baku and its suburbs due to the increasing number of vehicles on local roads. In 2011, the number of automobiles in the country increased by 59,800, and today 42 out of 100 families own a private car. The Ministry of Transport is also fully determined to improve traffic conditions in Azerbaijan as part of the preparations to host Eurovision 2012, with it set to purchase 200 new buses in the near future, adding to the 2,500 buses that operate daily in Baku. Furthermore, since 2008, 17 new road junctions and 75 pedestrian passageways have been constructed.
Some 1.3 million passengers and 45,300 tons of cargo were transported via Azerbaijan’s air transport infrastructure during the January-November period in 2011, a 37.9% and 27.9% increase, respectively, from 2010 according to Azstat. Approximately 97% of this transportation was carried out by state-owned economic enterprises, with the remaining 3.1% conducted by the private sector. The country currently has 35 airports, of which four are international: Baku, Ganja, Lankaran, and Nakhchivan. Heydar Aliyev International Airport, located on the outskirts of Baku, is the largest air hub in the country. The airport is currently undergoing an expansion process with the construction of a new terminal with a complex area of 58,000 sqm that will serve 3 million passengers annually. The airport currently has a modern 12,000-sqm cargo terminal, which has strengthened Azerbaijan’s position as a transport hub to Asia and the Middle East, something many companies have already benefited from.
Azerbaijan Airlines (AZAL) is the national carrier and currently has a fleet of 21 aircraft that will be expanded in summer 2012, when the company will receive three aircraft from the Boeing Corporation; a passenger plane Boeing 767-300ER, and two cargo Boeing 767 planes. In 2014, AZAL will also receive a Boeing-787 Dreamliner, the first of its kind in the CIS, and an aircraft that will allow the company to launch flights to more distant destinations.
Silk Way Airlines is the other national airline, focused on cargo transport. The company currently operates 12 aircraft and links Azerbaijan with other European, Asian, and Middle East destinations. Other international carriers that serve Azerbaijan are Turkish Airlines, Astana Airlines, Lufthansa, Aeroflot, BMI, Air Baltic, Iran Air, Fly Dubai, and Qatar Airlines.
Azerbaijan boasts the largest seaport on the Caspian Sea, and is connected via maritime routes with its fellow Caspian states—Russia, Kazakhstan, Turkmenistan, and Iran—and also some European countries through the Volga-Don canal, which provides access to the Black, Marmara, and Mediterranean seas. The Baku Sea Trade Port’s main activity is the transport of oil and oil-related cargo. In 2011, 12.5 million tons of freight was transported by sea, which represents 6.1% of the overall transport balance, and an increase of almost 1 million tons compared to 11.7 million tons in 2010.
The port can accommodate ships of up to 12,000 deadweight tonnage (dwt) in capacity, and its facilities include portal cranes, tugboats, and equipment for handling petroleum and petroleum products. However, the current expansion and modernization works at Baku Sea Trade Port, which have an approximate cost of $480 million and are to be finished by 2014, will enable the maritime infrastructure to handle 30 million tons of freight per year, leveraging the country’s maritime capacities as a vital transport link. A new shipbuilding facility is also under construction in south Baku, with SOCAR partnering with Keppel Corporation from Singapore to develop the infrastructure. The new facility will be capable of building tankers and 70,000-ton capacity ships. As of today, the Azerbaijani State Caspian Shipping Company is the main shipping company in the country, operating 80 vessels, including 43 tankers and 37 dry-cargo tankers, though other companies such as Cross Caspian and ASCO are mainly focused on maritime transportation, especially in the oil and gas sector.
© The Business Year