The government formalized on Thursday its extremely ambitious plans to seek more than $1 billion in external funding for the expansion and upgrading of Armenia’s key highways which it says would turn the country into a regional transit hub.
The government ordered relevant regional authorities to halt any construction along hundreds of miles of roads stretching from northwest the Armenian-Iranian border to Georgia. It also approved funding for the first feasibility study on the project which it hopes will be financed by the Manila-based Asian Development Bank (ADB).
“We are launching a big process of road construction,” Prime Minister Tigran Sarkisian said at a weekly session of his cabinet. “North-South highway will meet the highest international standards,” he told ministers.
Sarkisian estimated the total cost of the project at roughly $1.5 billion, a sum worth more than half of Armenia’s state budget for this year. He said the Armenian government has already asked the ADB for a $700 million loan to finance the first phase of road reconstruction. The bank’s governing board will consider the request when it meets next month, he added.
Transport and Communications Minister Gurgen Sargsian said last month that Yerevan and the ADB are already negotiating on the release of $1 million in funding for the comprehensive feasibility studies on the project. “The project enables us to play a serious transit role in the region,” he told journalists. “So it’s not an Armenian project, it’s a regional project.”
Sargsian said that neighboring Iran would find it much easier to use Armenian territory for cargo shipments to and from Georgia and other countries. He also stressed that the upgraded roads would connect to a highway in southern Georgia leading to the Black Sea ports of Batumi and Poti.
The Armenian and Georgian governments agreed last year to jointly seek external assistance for rebuilding that highway and thereby significantly shortening travel between Armenia and the Georgian Black Sea coast. The issue was on the agenda of Georgian President Mikheil Saakashvili’s recent visit to Yerevan. Sarkisian said afterwards that the ADB has agreed in principle to finance the project.
The bank was already approached by the Yerevan government last year over the financing of an even more ambitious project to build a railway connecting Armenia and Iran. Expert says its implementation would cost more than $1 billion.
The figure pales in comparison with at least $5 billion need for the construction of a new reactor at the Metsamor nuclear power plant planned by the government. The latter insists that foreign investors have shown an interest in the project. But it has still not named any of them.