ADB: Lower demand for railway transportations to deepen financial problems

The Asian Development Bank (ADB) has published a report on the implementation of the development program in the sphere of railways in Azerbaijan.

Report informs that the document features the current state and forecasts on the country’s railway sector and provides information about the projects implemented within the ADB program.

The railway development program for Azerbaijan will fund the restoration of the Sumgayit – Yalama railway line and structure.

The Azerbaijani Railways Development Program will provide funding for the rehabilitation of the Sumgayit-Yalama railway line and structure. The Sumgayit-Yalama railway line plays an essential role in the North-South transport corridor. The Azerbaijani Railways Development Program will improve the operation and management of the railway network, re-form the systems of finance, reporting, and control.

It is emphasized that in Azerbaijan, there is a steady decline in the share of the railroads in the transport system. This trend is also observed in other countries of the region. The expansion of the road network and the improvement of the oil and gas network have led to competition with the railways. For many years, a lack of investment has hampered the development of railway infrastructure.
In the early 2000s, investments in the oil and gas industry also benefited the sector. It has benefited from the growth in exports and imports of building materials and consumer goods. However, the market share of rail transport continued to decline.

26.5 million tons of cargo were transported by rail in 2006, 22.4 million tons in 2010, and 15.5 million tons of freight in 2016. The transportation volumes in 2020 amounted to 4,631,000 tons of cargo.

Current problems have worsened the financial performance of Azerbaijan Railways CJSC. Only the growing debt of the company allowed it to continue operations.

Currently, the decline in demand for freight transport by rail and a sharp decline in passenger traffic will cause serious institutional and financial problems for the company. The East-West railway corridor has been modernized since 2009. And in the North-South transport corridor, four railways need further expansion. At the same time, the railway line from Yalama to Astara has excellent potential, and this road is being improved. It is planned that this road will be extended from the Iranian province of Rasht to Astara.

The Asian Development Bank began the implementation of the railway sector development program in Azerbaijan in 2017.