BAKU – An agreement on Azerbaijan’s allocation of an additional $575 million loan to Georgia to build its section of a major railway to link the two countries with Turkey was signed in Baku on Friday.
The allocation brings Azerbaijan’s total lending to the neighboring country under the Baku-Tbilisi-Kars railway project to $775 million.
The funds will be spent to build a 4 km tunnel stretching to Georgia’s border with Turkey. Also, the 160 km Marabda-Akhalkalaki section of the railway will be overhauled.
The new loan was allocated for 25 years, with 5% annual interest rate. It will be disbursed in two tranches through the Georgian office of the International Bank of Azerbaijan (IBA), the country’s leading bank.
The loan covenant was co-signed by Azerbaijani Transport Minister Ziya Mammadov and Marabda-Kartsakhi Railway director general Bidzina Bregadze.
The first tranche of Azerbaijan’s loan to Marabda-Kartsakhi Railway, worth $200 million, was earlier disbursed for a 25-year period, with 1% annual interest rate. The funds were designated to finance the construction of a 29 km rail line in Georgia. Moreover, the existing section of the railway will be upgraded in the country.
Azerbaijan’s Azerinshaatservice is carrying out construction work in the Georgian part of the railroad.
In Turkey, a new 76 km rail line stretching from the border with Georgia to the city of Kars will be constructed.
Azerbaijan, Georgia and Turkey signed an agreement on the railway project in February 2007 in Tbilisi, and construction of the railway began in November that year. Construction operations are due to be completed by the end of 2012 and it will be commissioned in early 2013, the Azerbaijani transport minister said earlier.
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.
The cost of the Baku-Tbilisi-Kars project has been gradually increased to $1.2 billion.