Caspian Business News,
24, August 2007
By Jamil Bayramov

Representatives of the Ministry of Transport of Azerbaijan and Azerbaijan State Railway (ADDY) returned from Georgia following discussion of the technical work required for the rehabilitation and reconstruction of the Marabda-Akhalkalakhi section of the Baku-Tbilisi-Kars railway.

The Ministry of Transport of Azerbaijan reported that together with Kav-transproject LLC, expert groups from Georgia, and other institutions, the feasibility study on eradication of problems, prepared by Yuksel Doman-ic Engineering Limited Turkish Company, was discussed. "The construction of the Baku-Tbilisi-Kars railway was supposed to include the rehabili-tatation and reconstruction of this 160 km line" the press-release stated.

Yesterday, Georgia completed the process for 'expression of interest' for juridical and financial services within the project realization. The selection involves 2 stages. The Azerbaijani government is to disburse a $200 million credit to Georgia from the country's State Oil Fund (SOFAZ) for financing the reconstruction of the Marabda-Akhal-kalaki railway branch, and the construction of a new railway segment Akhalkalaki - Georgia-Turkish border. The credit will be extended to credit general lender Railway Marab-da-Akhalkalaki LLC, founded by the Georgian Transport Ministry, for a 25-year period at the rate of 1% per annum through International Bank of Azerbaijan's subsidiary IBA-Georgia.

The Baku-Kars-Akhalkalaki-Tbil-isi Railway Project includes construction of a 98 km Kars-Akhalkalaki branch (68 km in Turkey and 30 km in Georgia), and certain reconstruction on the Akhalkalaki-Tbilisi section. The construction in Turkey is valued at $220 million and in Georgia at $202 million.

The branch, with direct access to the European railway network, will carry around 30 million tons of cargo annually. The Project itself foresees a 5-10 million annual cargo transportation.

The Basic Agreement on Baku-Tbilisi-Akhalkalaki-Kars railway line and the Financial Agreement with Georgia on railway section at Marab-da-border with Turkey (Kartsakhi) were put into force in Azerbaijan on April 21 (both agreements were signed in Tbilisi, Georgia, on February 7).

Marabda-Karzakhi LLC provided interested participants with all necessary documentation required for the 2-stage tender for the accounting-financial services to rehabilitate and reconstruct Baku-Tbilisi-Kars railway - Georgian section. Distribution of documentation for the juridical services tender was completed on August 20. LLC reported that two companies have expressed interest in participation in each tender.

"All are Georgian Companies. The main tender tour will be carried out until August 29 and offer estimation will take time," LLC noted.

All interested legal entities and individuals of Georgia and foreign countries may participate in the tendering process. Rendering of all services is foreseen for 3 years.

The Contractor for juridical services must render juridical service to meet international standards in Georgia and abroad, prepare juridical expertise of projects and contracts, agreements, other deals, and official documentation; render registration services; present and protect customer's rights in courts and all law machineries.

Accounting and financial services assume the working and introduction of accounting and reports, accounting operations; preparation, handling and storage of primary accounting documentation; bookkeeping according to the transactions; periodical inventory of assets and liabilities; working and introduction of inner control procedures; preparation of tax report, annual and quarter reports, organizing of customer's audit every 6 months and for the calendar year as a whole.

Contracts will be financed at the expense of Azerbaijan's loan to Georgia ($200 million for 20 years with 1% rate). The first tranche (approx $50 million) will be transferred to Georgia by the end of the week.