Azernews.Az

BAKU – The cost of the Baku-Tbilisi-Kars railway project that will link Azerbaijan with Turkey through Georgia will be reconsidered and is likely to increase, Azerbaijani Transport Minister Ziya Mammadov said after talks in Tbilisi on Tuesday.

A source at Azerbaijan Railways said earlier that the Azerbaijani government is ready to allocate an additional $500 million to finance the construction of the railway’s Georgian section. The country’s State Oil Fund has already allotted a 25-year loan worth $200 million for the purpose, with a 1% annual interest rate.

"Certainly, the situation is changing, therefore, the project’s cost will probably grow, as the prices are no longer the same," Mammadov said. He did not elaborate on the amount of a new loan to be provided by Azerbaijan, adding that the issue would be agreed by financial experts.

According to Mammadov, consultations on the issue are underway, and the Azerbaijani and Georgian presidents have instructed their finance ministers to discuss it.

Georgian Minister of Regional Development and Infrastructure Ramaz Nikolaishvili, who hosted the Azerbaijani delegation, said that the parties had discussed the work ongoing under the project.

"Operations are currently underway to build a 4 km tunnel on the border with Turkey and issues of simplifying customs and border passage regulations are being discussed," Nikolaishvili said.

According to him, half of the amount lent by Azerbaijan under the railway project has been spent and operations worth the remaining $100m are being planned.

The Azerbaijani and Georgian ministers said discussions on the project will be joined by Turkish Transport Minister Binali Yildirim on Wednesday.

"This is a project that is crucial for the region, and we will thoroughly discuss the work that remains to be done to carry out the construction of the railway, which will directly link Asia and Europe," Nikolaishvili said.

Under the project, initially valued at $600 million, a new rail line stretching for 105 km will be built, including 76 km in Turkey and 29 km in Georgia. Moreover, an existing section of the railway will be upgraded in Georgia, which will increase its annual throughout capacity to 15 million tons of cargo.

The Azerbaijani transport minister said earlier that construction work is due to be completed in the first half of 2012. However, the parties involved are seeking to speed up the process and wrap up most of the operations by the end of 2011.

The throughput capacity of the railway will peak at 17 million tons of cargo per year. Initially, the capacity will be 6.5 million tons of consignments and 1 million passengers.