Azerbaijan: Railway Sector Development Program

Sovereign Project | 48386-001

The Government of Azerbaijan is endeavoring to transform Azerbaijan Railways (ADY) into a profitable company and to improve railway service delivery. It has requested the Asian Development Bank (ADB) to finance (i) railway sector and corporate reforms and ADY financial restructuring; and (ii) improvements to railway infrastructure, particularly along the north-south railway corridor.

Project Details

  • Project Officer
    Sluijter, Jurgen
    Central and West Asia Department
    Request for information
  • Country
    Azerbaijan
  • Modality
    • Technical Assistance
  • Sector
    • Transport
Project Name Railway Sector Development Program
Project Number 48386-001
Country Azerbaijan
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 9154-AZE: Railway Sector Development Program
Technical Assistance Special Fund US$ 1.00 million
TA 9154-AZE: Railway Sector Development Program (Supplementary)
Technical Assistance Special Fund US$ 330,000.00
Strategic Agendas Inclusive economic growth
Regional integration
Drivers of Change Governance and capacity development
Knowledge solutions
Sector / Subsector

Transport / Rail transport (non-urban)

Gender Equity and Mainstreaming No gender elements
Description The Government of Azerbaijan is endeavoring to transform Azerbaijan Railways (ADY) into a profitable company and to improve railway service delivery. It has requested the Asian Development Bank (ADB) to finance (i) railway sector and corporate reforms and ADY financial restructuring; and (ii) improvements to railway infrastructure, particularly along the north-south railway corridor. This program preparatory technical assistance (PPTA) will prepare (i) a comprehensive policy matrix for the policy-based loan covering institutional and operational changes at ADY, financial restructuring at ADY, and other policy areas as needed in full consultation with all key railway stakeholders; (ii) a feasibility study for repair and rehabilitation of the double-track section between Baku and Yalama (border with Russia); and (iii) ADB loan processing documents, including a sector assessment; technical, economic, and financial appraisals; environmental, social, and poverty impact assessments; procurement preparation and project implementation arrangements.
Project Rationale and Linkage to Country/Regional Strategy

Recent economic growth in Azerbaijan has declined from 13% during 2002 -2013 to 2.8% in 2014 and 1.1% in 2015. As a result, gross expenditure on railway services decreased substantially. Azerbaijan Railways Ltd (ADY), a government-owned, closed joint stock company, manages the country's railway and has been operating for more than 100 years. Current traffic is only about one third of the peak rail traffic in late 1980s. Traffic volumes declined as inter-republic trade and public investment dropped, sector policy stagnated, competition from highways and pipelines grew, and management remained inefficient.

ADY is vertically integrated and organized by functions such as infrastructure, rolling stock, and freight/passenger operations. Most of its revenues come from freight; passenger services lose money but are socially important. ADY struggles to maintain market share and to finance system upgrades: half of the country's rail tracks need reconstruction or rehabilitation; about 57% of locomotives are operational, but old; and power and signaling systems need urgent replacement. The lack of supporting policy and institutional reforms and the fact that tariffs are centrally controlled have aggravated ADY's current financial situation. Financing future infrastructure investments, maintaining existing infrastructure, and servicing legacy debt are challenges for ADY. In order to improve efficiency, reduce costs, and invite private sector participation, concrete institutional, financial and corporate reforms are necessary.

Railway rehabilitation and modernization on the east-west rail line has been underway since 2009, largely financed by the World Bank and the Czech Export-Import Bank. The Baku-Tbilisi-Kars rail corridor is expected to connect Azerbaijan to the Turkish network, linking countries on the Caspian Sea to the Black Sea and to Europe beyond. Railway sector prospects will be further enhanced if the north-south rail corridor from Yalama (on Azerbaijan's Russian border) to Astara (on the Iranian border) is also completed (8.8 km are missing in Azerbaijan and another 150 km inside Iran). These improvements will enable the railway to capitalize on the country's crossroads location and provide safer, more energy-efficient, cheaper, and less land-intensive transport services, thus regaining the important role it once played in supporting the economy.

The proposed railway sector development program is a government priority and a part of the Azerbaijan State Program for the Development of Railways 2016 -2020, which is now being finalized. The program fits with ADB's Midterm Review of Strategy 2020 and 2010 Sustainable Transport Initiative. It also supports the Central Asia Regional Economic Cooperation (CAREC) Transport and Trade Facilitation Strategy 2020 and forms part of the CAREC-designated railway corridor under the CAREC Railway Strategy 2030.

Impact
Project Outcome
Description of Outcome
Progress Toward Outcome
Implementation Progress
Description of Project Outputs
Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Baku, Yalama
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design

The stakeholders include the Azerbaijan Railways (ADY), the Ministry of Finance, the Ministry of Economy, railway users, local people living in the project area (men and women), affected people, and people who have the opportunity of getting employment during railway construction with the contractor firm and during railway maintenance activities after the completion of the Project. The main project stakeholders outside ADY are being duly consulted, through meetings and briefings, during the project design.

Meetings with local governments and communities, and focus group consultations with local communities and/or affected people, supplemented by surveys, were being conducted. Issues to be discussed include, but are not limited to, resettlement compensation of affected persons, protection of communities from construction and environmental disturbances, and of safety hazards to workers and the public during construction, temporary employment opportunities, and how villages along and off the railway can benefit from the proposed Program.

During Project Implementation Project is ongoing. Consultations are conducted as needed at least through project review missions.
Business Opportunities
Consulting Services Consulting services to be financed under the TA will be recruited in accordance with the Procurement Regulations for ADB Borrowers (2017, as amended from time to time) and require ADB''s prior review.
Procurement Procurement of goods to be financed under the TA will be guided by the Procurement Regulations for ADB Borrowers (2017, as amended from time to time) and require ADB''s prior review.
Responsible ADB Officer Sluijter, Jurgen
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Transport and Communications Division, CWRD
Executing Agencies
Azerbaijan Railways Closed Joint Stock Company
Elkhan Orujov, Director, Project Implementation Unit
[email protected]
Dilara Aliyeva Str. 230, Baku, AZ1010
Timetable
Concept Clearance -
Fact Finding -
MRM -
Approval 04 Jul 2016
Last Review Mission -
Last PDS Update 08 Nov 2018

TA 9154-AZE

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
04 Jul 2016 21 Sep 2016 21 Sep 2016 01 Mar 2018 31 Dec 2018 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
1,330,000.00 0.00 0.00 0.00 0.00 0.00 1,330,000.00 18 Nov 2021 1,227,665.58

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.


Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.


Evaluation Documents See also: Independent Evaluation

None currently available.


Related Publications

None currently available.


The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.

Tenders

Tender Title Type Status Posting Date Deadline
Electricity Commercialization Specialist Individual - Consulting Closed 12 Jul 2018 25 Jul 2018
Procurement Specialist Individual - Consulting Closed 16 Mar 2018 22 Mar 2018
PIU-Office Manager Individual - Consulting Closed 23 Aug 2017 31 Aug 2017
PIU-Project Manager Individual - Consulting Closed 23 Aug 2017 05 Sep 2017
PIU-Railway/Civil Engineer Individual - Consulting Closed 23 Aug 2017 31 Aug 2017
PIU-Procurement Specialist Individual - Consulting Closed 23 Aug 2017 31 Aug 2017

Contracts Awarded

Contract Title Approval Number Contract Date Contractor | Address Executing Agency Total Contract Amount (US$) Contract Amount Financed by ADB (US$)
Project Preparatory Technical Assistance 9154 27 Feb 2017 Systra France (France) | 5, Avenue Du Coq, 75009 Paris France Azerbaijan Railways Ltd. 479,401.00

Procurement Plan

None currently available.