Armenia Needs the North South Road Corridor | Asian Development Bank

Armenia Needs the North South Road Corridor

Op-Ed / Opinion | 13 September 2017

Stretching over 550 kilometers, the North-South Road Corridor is one of Armenia’s most strategic pieces of infrastructure. It will extend the trans-European transport network and connect the full length of Armenia, from Iran to Georgia and beyond. This high-capacity highway, built with modern engineering and design, will drive Armenia’s economic growth and integration with the world. 

For these reasons, upgrading the corridor is one of the government’s highest priorities and the reason the Asian Development Bank (ADB) has provided financing for three major sections of the corridor. The rationale, benefits, and costs of the project, however, remain unfamiliar to many Armenians. Here are the facts:

The design: A major priority for the North-South Road Corridor has been to ensure that it is built for the long-term development needs of the country. When ADB was brought in, we agreed with the government that the project should be designed to maximize durability, reduce long-term maintenance costs, and extend the life of the road. By using concrete for some sections, the designers will extend the life of the road from 10 years, for asphalt, to over 30 years. While this raises costs in the short term – as construction requires specialized paving machines, highly trained operators, and rigorous quality control – the long-term maintenance costs more than pay for the additional upfront costs. By constructing four lanes along the busiest parts of the corridor, the road is also designed to meet Armenia’s growing export sector. 

The geography: Due to its size, cost and complexity, the North-South Road Corridor is being completed in sections. The first ADB-financed section, connecting Yerevan with Artashat and Ashtarak, was completed in 2016. It carries some of the heaviest traffic in the country and is already bringing substantial economic benefits to the areas it has connected.  

Two other ADB-financed sections are under construction right now: Ashtarak to Talin (42km) and Talin to Lanjik (18.7km), with more than 25 kilometers to be paved by the end of this year and completion in 2019. These sections are located in more challenging terrain and include newly aligned sections that require land acquisition, construction of bridges and other structures, protection of valuable archaeological sites, and relocation of utilities. They are priorities for connectivity with Georgia and some of the larger population centers.

The financing: ADB is providing long term financing for three sections of the corridor through three loans, totaling $ 330 million, which were made in 2009, 2010 and 2014. Each financing package was finalized only when a given section of road was ready to proceed. As an ADB member country, Armenia benefits from ADB’s AAA credit rating, which translates into long term loans at rates well below Armenian government borrowing costs. 

The costs: Construction costs for the ADB-financed sections are well within the range of similar roads in other countries. While costs vary depending on terrain, availability of materials, and the cost of resettlement and land acquisition, it is not unusual for construction costs in the region to reach $ 8 million per kilometer. By contrast, the Ashtarak-to-Talin is estimated at about $ 3.5 million per kilometer, while the Ashtarak and Artashat sections cost about $ 2 million per kilometer. 

ADB is bringing more than financing to the North-South Road Corridor. Contracts for design, construction and supervision are all tendered on a competitive basis in accordance with international best practice. This ensures that firms contracted for the project have the right experience and capacity, technically and financially, and that contracts include internationally-accepted mechanisms for resolving and negotiating disputes. ADB also provides grant-based assistance to strengthen project management and regularly monitors progress including compliance with environmental and social safeguards requirements.

The benefits: Upgrading the North-South road is bringing with it many benefits. About two out of three households situated along the corridor derive their income from services or industry, and about a third make their living in agriculture and related enterprises. Shorter travel times and lower bus fares and freight charges will improve life for businesses and for families, especially those who are poor and vulnerable. 

The North-South Road Corridor is also critical for regional integration. Most of Armenia’s imports and exports are transported by roads; improving travel times and reducing costs means lower prices and greater competitiveness. Once completed, the North South Corridor will enable Armenian businesses to more easily achieve economies of scale and to integrate into global value chains. That benefits the entire economy.

ADB is proud to work with the Government of Armenia to help the country increase living standards, raise productivity, and create jobs. The North South Road Corridor is essential for Armenia’s long-term development.