Russian Railway ‘Not Honoring’ Armenia Investment Pledges

YEREVAN (RFE/RL)–The Armenian government expressed its discontent with the Russian management of Armenia’s rail network on Tuesday, with Transport and Communications Minister Gurgen Sargsian again accusing it of failing to honor its investment commitmen’s.

Russia’s state- run rail company, RZD, took over the network in January 2008 after signing a long-term management contract with the government. The agreement committed it to investing $230 million in Armenia during the first five years of operations and another $240 million in the following years.

Sargsian said that the Russia’s invested only 3.5 billion drams ($11.5 million) in the cash-strapped network, recently renamed the South Caucasus Railway (SCR), last year. “Only 30 percent of the 2008 investment program envisaged by the management contract was carried out,” he told a news conference.

That program envisaged, among other things, repairs and replacement of SCR rail tracks and the purchase of several new locomotives. According to Sargsian, the railway management failed to do that.

The minister said the SCR operator has assured his government that it will eliminate the investment shortfall this year in addition to making 12 billion drams worth of capital investmen’s originally planned for 2009. The SCR’s new chief executive, Shevket Shaydulin, said earlier this month that RZD investmen’s in Armenia will total about $80 million this year.

Shaydulin’s predecessor, Aleksandr Kuznetsov, was replaced late last year after Armenian state regulators launched an investigation into the legality of a sharp increase in the cost of cargo shipmen’s and other services provided by the SCR. The rail company also faced embarrassing media allegations of profligacy after it emerged that it spent large sums on expensive apartmen’s and cars for its personnel.

Shaydulin accepted some of the criticism, announcing that the SCR will auction off ten of those vehicles and a house in Yerevan. But he defended other apartment purchases, saying that they are intended for accommodating Armenian railway specialists living outside the capital, rather than RZD executives from Russia.

Meanwhile, a cargo train laden with gold ore was derailed in an accident in central Armenia on Monday night. No casualties were reported. An SCR spokeswoman’said the company is investigating possible causes of the accident.

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