Commodities, Emerging Markets, Energy, Frontier Markets

Azerbaijan Investing Heavily In Its Railroads With The World Bank Support

Azerbaijan’s railroad supporters say their country is the crucial link between east and west, the missing tie that speeds goods from the east to the markets of the west.  521 Origin Down

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A fast, efficient railroad system is, some experts say, both the key to regional integration and an enormous economic engine—a system that, in the first five months of 2014, carried over 8 million tons of freight. Over 70 percent of that freight is oil, and the focus now is on getting it from the edge of the Caspian Sea to the country’s western border with Georgia.

“Today we ship about 3,000 tons of freight to central Azerbaijan in about 11 or 12 hours,” says Tofig Masirov, who is the chief of the Bilajari Locomotive Depot. “With new locomotives, the trains can move 5,000 tons, minimum, in half that time.” Masirov is in the right place to watch the changes coming.

Twice as Much, Twice as Fast

With support from the World Bank, and for the first time in 30 years, Azerbaijan is investing heavily in its railroads. Among the improvements are 50 new locomotives. Others include improved signals and switches, staff training and a reorganization of the way the railroad company does business, moving from government control to a joint stock company. The project refurbished 500 kilometers of track. The country’s goals for the railroad improvements are ambitious.

“Who is going to benefit the most is obviously the small and medium sized businesses, the regional businesses, but beyond that, it is really going to have a transformational impact on the entire region as a whole,” says Taleh Ziyadov, a research fellow at Baku’s ADA University and the author of a study titled “Azerbaijan As a Regional Hub in Central Eurasia.”

A typical train runs from Baku to Georgia loaded with 40 cars’ worth of oil. Right now, though, the locomotive pulling those 40 cars is long past its expected life span; 95 percent of the country’s locomotives are past their prime. The powerful new locomotives will be able to pull trains 70 to 80 cars long, carrying oil and goods from Azerbaijan and from places farther east, like Kazakhstan.

With support from the World Bank, Azerbaijan is investing in its railroads, which many here see as a crucial link between the oil fields and markets to the west. World Bank

With the investments, railroad officials say freight loads and traffic will soar, from about 3,000 tons today to twice that.  And the time it takes to move that cargo will be cut in half. World Bank

50 new locomotives are among the improvements; these new engines will be able to pull trains 70 to 80 cars long. World Bank

A Big Impact

The changes will benefit Azerbaijanis far beyond the transport and oil industries. “Transporting oil to international markets raises revenues for the government; these revenues help support the country’s budget through rising wages and salaries and social service payments,” says Qurban Nazirov, the deputy chairman of Azerbaijan Railways.

The railroad upgrades are scheduled to be finished in 2017, and because the modern system will be able to carry three times the load it carries now, another change concerns potential hazards. Albert Safarov runs the emergency response team tasked with handling oil spills. “The railroad goes through populated areas where people are living and so a quick response is important for environmental reasons, and for the health of the people who live nearby.”

Many here see Azerbaijan as the missing link between Europe and Asia. And, a modern east-west rail system, with state of the art equipment, clear and transparent financial management, and a healthy load of cargo is just the way to pull the region together.


Courtesy of The World Bank, © 2015 The World Bank Group

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