DAVID ONOPRISHVILI has a new challenge. Appointed as Chairman & Managing Director of Georgian Railway at the beginning of June, he is tasked with turning the network around and restructuring it for privatisation.
As the country's former Finance Minister, and a member of the economic reform policy committee, Onoprishvili has seen huge changes sweeping across Georgia's economy. But so far, he says, these have largely passed the railways by. 'The railway is still run in the same way that we inherited from the Soviet Union', he explained during a Railway & Transport Reform seminar hosted in London by LVA (UK) Ltd on June 28. 'Up to this year, there had been no effort to reform the railways - which has caused a lot of harm, as the rest of the economy is changing rapidly.'
'GR's financial situation is weak - the management was corrupt, and there has been no proper auditing process.' Onoprishvili says the turnaround will be a step-by-step process. 'Our first priority is to clarify the present situation', he explains, noting that a new financial management system and auditing process is being put in place.
At the same time, he has commissioned 'a proper evaluation of the assets' which he believes are seriously undervalued. This has a spin-off in that not enough money is being set aside to cover depreciation and renewals. 'The wagon fleet and the locomotives are very depreciated, and we need to invest heavily in their replacement. At the same time, the railway owns a lot of land and property, and non-core assets like hospitals and even tourist resorts and hotels. We must work out what we actually need, and get rid of the rest.'
In parallel with the financial changes, Onoprishvili has started drawing up a strategic development plan, which is to be completed by the end of this year. Once this is ready, GR will be legally restructured as a state-owned joint-stock company. The ultimate intention is to move towards privatisation, although he does not expect to see the restructuring process get underway for around 18 months.
Ancilliary businesses such as the hospitals and resorts will be converted to separate companies and sold off, raising money for investment in core activities. The strategic plan will look at ways to bring in private-sector finance to the railway, but Onoprishvili believes an early candidate will be the purchase or leasing of rolling stock. Separation of train operations from infrastructure management is also on the cards, although the preferred structure is unlikely to emerge for another year.
GR is currently isolated from much of the former Soviet network because of unrest in the Abkhazia region in the northwest, which has closed the main line to Russia for over 12 years. During June Onoprishvili met RZD President Gennady Fadeyev at the CIS railways meeting in Toshkent, and agreed to set up a working group which will plan the renovations needed to reopen the route 'so that we are ready to start as soon as the political situation improves'. The working group will 'clarify the technical issues, define what needs to be done, how it will be done and how the work [and costs] will be shared.'
GR has cross-border links to Armenia in the south and Azerbaijan in the east, but the tensions between these two neighbours have spilled over to impact on the railway's traffic flows. The route to Azerbaijan accounts for much of GR's international business, moving to and from Baku on the Caspian Sea.
Despite these problems, GR's turnover improved last year, with freight traffic increasing slightly to 16 million tonnes. Of this, 80% is transit traffic moving to and from the train ferry ports of Poti and Batumi on the Black Sea coast. Traffic levels are well below 1985, when SZD's former Caucasus Railway handled 63 million tonnes in what is now Georgia and Armenia, but a significant improvement on the 4·6 million tonnes handled by GR in 1995. GR also recorded 2·1 million passenger journeys in 2003, mainly on inter-city services between Tbilisi and the larger towns in the west.
Onoprishvili says rail still has a 90% share of all domestic freight movements within Georgia, thanks to the poor state of the country's roads. However, he recognises that significant investment will be needed to improve average train speeds and attract more business as the rival modes start to improve and competition begins to bite.
The train ferry routes link Georgia with Russia, Ukraine, Bulgaria and Romania. Onoprishvili says GR is currently discussing proposals with the Romanian railways to convert the port railway installations at Batumi to standard gauge, handling business to and from Constanta in Romania and Varna and Burgas in Bulgaria. Broad-gauge traffic to and from Ulchevsk near Odesa in Ukraine would be concentrated on the Poti route.
One innovation to boost traffic on the Traceca corridor between Europe and Central Asia has been the creation of a new multi-modal hub at Tbilisi Airport. GR and the airport authority are shareholders in Tbilisi International Cargo Handling, with private shippers TDM and SPM.
In the longer term, Georgian President Michael Saakashvili would like to see the country's railways integrated more closely with the European network. Onoprishvili says two routes for a rail link with Turkey are currently being examined. One would run along the coast from Batumi, requiring just 15 km of new construction in Georgia but around 250 km in Turkey. The other is the long-planned link over the mountains from Akhalkalaki to Kars, which is shorter but would require heavier civil engineering works.
- CAPTION: A 3·3 kVDC electric loco climbs the Surami pass with a transit freight train
- CAPTION: GR builds new rolling stock and maintains its locos in its own workshops
- CAPTION: Double-tracking work in progress on the Marelisi - Dzirula line