The Armenian government decided on Thursday to dissolve a state-owned company that was supposed to oversee the planned construction of a railway connecting Armenia to neighboring Iran.
Transport and Communications Minister Vahan Martirosian insisted that the move does not mean the government is abandoning the extremely ambitious and expensive project. The government simply wants to save 35 million drams ($73,000) in annual budgetary spending on the company called the Railway Construction Directorate, he said.
“Our ministry has a department on railway which can take over [the company’s] functions,” Martirosian told reporters after a weekly cabinet meeting in Yerevan.
The company employing 13 people has absorbed 185 million drams in government funding during its five-year existence, according to the minister.
The Armenian and Iranian governments have discussed the railway project for more than a decade. Shortly after taking office in 2008, President Serzh Sarkisian announced that work on the rail link will get underway in the next few years.
However, Yerevan has so far failed to attract an estimated $3.2 billion needed for building the 305-kilometer-long Armenian section of the railway that would mainly pass through the mountainous Syunik province.
Sarkisian and Iran’s President Hassan Rouhani signaled no progress towards the project’s implementation after their December 21 talks in Yerevan.
Martirosian, who was appointed as transport minister in October, declined to speak of any time frames for the railway construction, admitting that its huge cost exceeding Armenia’s entire state budget remains the key obstacle. “But the project remains under government control,” he said.
Hayk Gevorgian, an economic writer for the Yerevan daily “Haykakan Zhamanak,” suggested that the project will not be implemented anytime soon. “The cargo and passenger traffic through that railway would be too small to convince investors to invest huge sums,” he said.
Gevorgian questioned government claims that the investments can be recouped within 22 years.