Industry Trend Analysis - Logistics Ambitions Underpin Strategic Railroad Completion - OCT 2017
BMI View: The recent allocation of funding to the Baku - Tbilisi - Kars railway will lay the foundation for the beginning of operations in 2018 and further the ambitions of Turkey, Georgia, and Azerbaijan in establishing the Caspian region as a key nexus of East - West trade.
The State Oil Fund of the Republic of Azerbaijan allocated USD631.79mn to fund construction of the Georgian section of the Baku-Tbilisi-Kars railway line, which will connect Azerbaijan, Georgia and Turkey, which informs our optimism that the train will be fully inaugurated in 2018. Funds were transferred through the International Bank of Azerbaijan to Marabda-Kartsakhi Railways LLC, which will be responsible for the design and construction of the Marabda rail section in Georgia to the border with Turkey and other infrastructure facilities, including a new logistics terminal at Akhalkalaki required before freight train operation may commence. Thus far, Azerbaijan has allocated USD775mn for the construction of Georgian section of Baku-Tbilisi-Kars project, a section previously delayed by environmental concerns and the South Ossetia conflict in 2008.
The completion of the railway is set to boost the logistics capacity in the Caspian region, which aligns with the ambitions of Turkey, Georgia, and Azerbaijan to establish the region as a key logistics hub in order to capture growing volumes of East - West trade. We note also that the ongoing emergence of the planned North - South trade corridor linking India and Russia will add additional upside to the region's logistical importance, establishing Azerbaijan in particular as a nexus along two burgeoning, perpendicular trade routes (see, ' NSTC Gaining Momentum, ' March 14, 2017).
|Railway A Harbinger For Future Infra Investment|
|The Baku - Tblisi - Kars Railway|