From Kars to Baku

The Flame Towers are seen in Baku, Azerbaijan, October 2, 2016. REUTERS/Alessandro Bianchi/File Photo

The Azeri railway network has had a busy few months.

In mid-December, the Asian Development Bank (ADB) approved two major loans, totalling USD400 million, to fund the developments of the transport sector. USD250 million will be used to improve administrative capacity, through the development of policy, the upgrading of services, and the improvement of governance and financial management.

The remaining USD150 million will directly impact the country’s infrastructure and retrofit 166km of double-line main track on the North-South Railway Corridor. This line connects Iran to Azerbaijan and then to Russia in the North.

In the words of the Director General of ADB’s Central and West Asia Department, Sean O’Sullivan, “reforms to Azerbaijan Railways and the support to the North-South Railway Corridor will help put Azerbaijan Railways on a sustainable growth path, improve services, and attract greater traffic with the improvement of an important regional transport link.”

This will allow Azerbaijan to become a strategic location for trade in the wider region, particularly within China’s One Belt One Road initiative, which is highly dependent on Central Asia’s transport capabilities.
For those ambitions to materialize, beyond the retrofitting of existing infrastructure, few projects are as important as the Baku-Tbilisi-Kars (BTK) railway. It officially opened on October 30th 2017 in Baku, seven years later than its initial launch deadline.

But the presence of President Ilham Aliyev of Azerbaijan, Kazakhstani Prime Minister Bakytzhan Sagintayev, Turkish President Recep Tayyip Erdogan, Prime Minister of Uzbekistan Abdulla Aripov, Georgian Prime Minister Giorgi Kvirikashvili, Minister of Transport of Tajikistan Khudoyor Khudoyorzoda, and Turkmenistan’s Minister of Railway Transport Deryaguly Bashimov at the launch ceremony clearly showed how the BTK’s importance in the wider region.

On November 28th another landmark moment was reached, when a train carrying 30 20-foot containers full of grain belonging to the Temir Zholy JSC company from Kazakhstan arrived and was offloaded at the Turkish city of Mersin, home to one of the country’s most important special economic zones and export ports.

The governor of Mersin, along with many other railway and government officials, was present at the symbolic ceremony of the departure of the train back to Kazakhstan, a 5,000km trip that now takes only 10 days to complete.

At present, the BTK is expected to transport one million passengers and 6.5 million tons of cargo per year, but it should soon expand to transport 3 million people and 17 million tons of cargo.

BTK and other railway extensions are expected to dramatically increase trade among Central Asian nations and beyond. According to Kazakhstani officials, in the first nine months of 2017 trade via train between Kazakhstan and Azerbaijan was at an all-time high, 1.5 times greater than the same period of 2016, largely due to improved infrastructure.

According to the project’s developers, the BTK will take 15 days to transport cargo between China and Europe. That is half of the time it takes via the sea route, and at a fraction of the cost it would take by air.

It has effectively open a new, faster connection from Baku to the world’s markets, and it is, understandably, expected to bring great economic benefits to all involved, as long as the country’s officials and businesses are capable of capitalizing on the new infrastructure and are quick to design appropriate policies. With this move Azerbaijan has become substantially more competitive.