PRESIDENT of Russian Railways Vladimir Yakunin was in Yerevan on January 16 for the official award of Armenia's 30-year national rail operating concession to sole bidder RZD.

The contract is expected to be signed during February, with Russian Railways' specially-formed 100% subsidiary South Caucasian Railway scheduled to take over Armenian Railway and all current employees in the second half of 2008. Ownership of the rail network will remain with the Armenian state.

RZD has committed to significant investment in infrastructure rehabilitation and development through the term of the concession, with around US$400m to be spent on infrastructure and US$170m on rolling stock. A study prepared for the World Bank estimates that $170m to $180m is needed over the next 15 years (RG 1.08 p52), and RZD plans to spend $170m in the first 10 years (RG 1.08 p52).

Minister of Transport & Communications Andranik Manukyan had invited bidders from 40 countries to submit offers for the concession on September 6 2007. The contract was specified as running for 30 years with an optional 20-year extension, and payments were fixed at 2% of revenue, plus taxes, with a $10m deposit. RZD will also make a one-off payment of $5m.

RZD and Rail India Technical & Economic Services qualified for the final round of bidding, but Rites withdrew from the competition during December.