Trilateral Agreement (hereinafter referred to as the "Trilateral Agreement") "On Baku-Tbilisi-Kars New Railway", as well as bilateral Agreement (hereinafter referred to as the "Bilateral Agreement") between the Government of the Republic of Azerbaijan and the Government of Georgia, as well as the Ministry of Transport of Azerbaijan Republic and "Marabda Kartsakhi Railway" LLC, on financing, design, rehabilitation-renovation and terms and principles for maintenance of Marabda-border of the Republic of Turkey (Kartsakhi) Railway Section within the new Baku-Tbilisi-Kars Railway implementation project, and Agreement on Credit Financing Terms of "Marabda-Border of the Republic of Turkey" Railway Section (hereinafter referred to as the "Credit Contract") within the framework of a New Railway line "Baku-Tbilisi-Kars" project were signed at the meeting with participation of President of the Republic of Azerbaijan Ilham Aliyev and President of Georgia Mikhail Saakashvili and Prime-Minister of the Republic of Turkey Rejep Tayyib Erdoghan in Tbilisi on February 7, 2007.
Implementation of international project of Baku-Tbilisi-Kars railway line and construction of railway line tunnel in Bosporus, along with providing connection of Trans-Europe and Trans-Asia railway networks and carrying freight and passengers directly through Azerbaijan, Georgia and Turkey territories will serve increasing the transit potential of regional countries, accelerate the processes of integration in Europe, develop the cooperation within the framework of European Neighborhood policy, intensify state independence and national liberation of Azerbaijan as well as serve to expand the foreign economic relations of our country.
Implementation of this project has significant meaning from the economic efficiency, speed, time, security and reliability standpoint.
Involving the freight belonging to European and Asia countries in this railway line in the future will increase the volume of intermodal and container transportation.
On May 18, 2011 in Baku, a Protocol was signed about some additions and amendments done to the bilateral agreement. On the basis of these changes, a new Loan Agreement, within the framework of the new conditions, was signed on July 01, 2011, between the Ministry of Transport of Azerbaijan Republic and "Marabda Kartsakhi Railway" LLC.
Total length of Kars-Akhalkalaki railway line is 105 kilometer. Construction of 76 km-long Kars and Akhalkalaki railway line running via Turkey will be implemented at the expense of Turkey. Construction of 29 km-long of Kars-Akhalkalaki railway line running via Georgia and rehabilitation/reconstruction of 160 km long existing railway line of Akhalkalaki-Marabda will be financed by the Republic of Azerbaijan in amount of 200 mln USD (loan) at annual rate of 1% with an option of extension allocated for 25 years (on Tranche A) and in amount of 575 mln. USD (loan) at annual rate of 5% with an option of extension allocated for 25 years (on Tranche B).
In accordance with bilateral Agreement, consultation body having exclusive power and monitoring the utilization of credit and for this purpose controlling its execution - Coordination Board has been established. The members of the Board from the Azerbaijan side are Minister of Transport, Executive Director of the State Oil Fund of the Republic of Azerbaijan, Deputy-Minister of Economic Development and Head of Azerbaijan Railway Close Joint-Stock Company.
Pursuant to Decree of President of the Republic of Azerbaijan No.1974 dated February 21, 2007 funding of "Baku-Tbilisi-Kars new railway line" project is implemented by State Oil Fund of the Republic of Azerbaijan. In accordance with this Decree, "International Bank of Azerbaijan" Open Joint Stock Company has been appointed as agent bank for organization of credit and provision of bank service on behalf of the Government of the Republic of Azerbaijan.
By order of President of the Republic of Azerbaijan No.2222 dated June 13, 2007 Ministry of Transport of the Republic of Azerbaijan has been appointed as an authorized body on behalf of the Government of the Republic of Azerbaijan under the bilateral Agreement.
Since the beginning of financing of the project till 01.10.2011 USD 182.6 mln., including USD 108.6 mln. during the 9 month of 2011 were allocated from the Oil Fund by treasury to the Ministry of Transport. According to the bilateral agreement between Georgia and Azerbaijan dated February 7, 2007, this assets were transferred to the account of Marabda-Kartsaxi Railway LLC through International Bank of Azerbaijan for relevant infrastructure project design, construction, rehabilitation, reconstruction and maintenance for the established maintenance of Marabda-border of the Republic of Turkey (Kartsakhi) Railway Section.
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