”In the near future, TRACECA will be in position to fulfill all expectations regarding supply of commodities”

Interview with Eduard Biriucov, Secretary General TRACECA

In his interview for Railway Pro magazine, Eduard Biriucov, Secretary General of the PS IGC TRACECA, explains the importance of TRACECA Corridor in the development of railway transport, the economy in the region and, implicitly, in the business sector growth, by granting investments, initiating  infrastructure projects and also implementing latest technologies aimed at developing communications systems. Over the next period, tens of railway projects will be initiated to finalize the corridor, thus encouraging the growth of traffic volumes between Europe and Central Asia.

Railway Prо
: What is the role of TRACECA in the Eurasian area? What projects have been initiated/elaborated in the past years?

Eduard Biriucov:Today the international transport corridor “Europe-the Caucasus-Asia” TRACECA is actively involved in progressive trends of developing trade ties since it is one of the connecting links in the international transport communication being a complex of multi-modal system of overland and sea routes ensuring direct connection between Europe and Asia. Currently the IGC TRACECA includes 13 countries: five European countries, three South-Caucasian, and 5 Asian countries, each country having its unique history, language, political and economic system. Our organization develops as a separate framework promoting trade ties and integration of the economies of the TRACECA member-states with the world market economies. In the course of its activity TRACECA evolved into a significant factor of development of transport systems and international contacts of the TRACECA member-states and gained wide popularity. Presently the transcontinental corridor TRACECA is officially recognized by the leading international organizations as one of the natural transit bridges connecting Europe with Asia. The idea of progressive advance of this transport corridor is substantiated by the fact that in the old days the “Great Silk Road” laid along this corridor. As the shortest route in the communication between West and East the TRACECA corridor demonstrated its competitiveness in a short space of time. Dynamically developing it presents a real alternative to traditional routes of freight traffic in this direction. Since launching the TRACECA programme with the EU financial support 78 projects have been realized to the amount of 163 million Euros (including 64 Technical Assistance projects, 14 Investment projects), more than 40% of the project budget was allocated for harmonization of the legal basis, streamlining of the border-crossing procedures, development of the tariff policy, institutional strengthening, capacity building and transport infrastructure development within the corridor. This in many respects helped to create favourable conditions contributing to attraction of large investments to the region. According to our information, the IFI’s investments to transport infrastructure of the TRACECA corridor have today exceeded 1 billion Euros. In connection with the current sanctions the EU Technical Assistance programme does not cover the Islamic Republic of Iran at the moment. The project implementation is vitally important to achieve the programme aims which promote the increase of international trade volumes and creation of attractive environment in the TRACECA region. The investment transport infrastructure projects are especially significant for construction of missing links and upgrading of the existing ones. Regarding railway transport in TRACECA countries it should be noted that it is one of the key components of the transport system. It is actually a decisive leader after pipeline transport with regard to land traffic volumes of bulk cargo delivered at medium- and long-distances. The significance of this mode of transport increases to a large degree in the land-locked countries. Railway transport is characterized by large-scale involvement, versatility, regularity and relative cheapness of railway traffic which is necessary for exports of raw materials and semi-produced goods. Railway transport is currently at the transitional phase characterized firstly by certain animation of interest towards railways, mainly in the sector of high-speed communications, heavy-weight and combined freight transport; secondly, reforming, restructuring and partial privatization of railway objects in a number of countries. Under the circumstances the development and proliferation of modern technologies is vital to ensuring further development of railways and reinforcement of their position in transport market.

Railway Prо: TRACECA includes a significant number of states that have to invest in projects aimed at improving railway transport between Europe and Asia? How do you see the implication of each state at the moment?

Eduard Biriucov:In TRACECA countries the historical development of transport to a large extent determined the level and dynamics of the countries’ development in whole and some of its regions. In this connection most of the TRACECA member-states are in great need of investments necessary for sustainable operation of railway transport based on the increase of technical level and services quality. On the one hand, there is a necessity in modernization of track, power and cargo facilities, higher level of technological availability of signaling and communication facilities, on the other hand – control of the process of hauling, introduction of new information technologies.

Referring to railway infrastructure it should be noted that among TRACECA members there are 9 former USSR countries, 2 former socialist bloc countries, as well as Turkey and Iran.

After the collapse of the USSR crisis processes in the economies typical for all the CIS countries as well as for Bulgaria and Romania had a negative impact on railway structures. The fall of production volumes and break of economic ties between enterprises resulted in more than 3 times fall of traffic volumes in the mid nineties compared to 1990-1991, the steadfast growth of traffic costs, as well as the nonpayment problem. Most CIS countries, the TRACECA members, overcame the crisis situation by the end of the nineties. Currently the railway transport in these countries meets the main demands of the economy in transport services being an important component of the countries integration with the system of world economic ties and promoting the development of external trade. But the situation does not answer the requirements. In order to ensure sustainable operation of railway transport it is necessary to achieve a steady growth of technological level and to increase the quality of services. Therefore with the view of promoting the development of railway industry there are implemented programmes for the development of technical facilities of the railway transport, capital repair of the rolling stock, speed optimization of the main railways, and the programmes for the development of telecommunications, passenger vehicles, etc. I would like to note that since the establishment of the IGC TRACECA all Technical Assistance and Investment projects have been identified in close cooperation with the European Commission and the MLA Parties, approved at the annual Conferences by the Intergovernmental Commission TRACECA being significant for increasing the volumes of foreign trade, cargo traffic growth and formation of an attractive environment in the region. But we should not be too hopeful. Today a state is not in position to release without assistance sufficient resources to meet all the requirements of transport industry, including the railway sector. It is precisely this fact that defines the search of investors as one of the priority tasks of TRACECA at this phase.The First TRACECA Investment Forum (TIF) held on 12 October 2010, in Brussels, opened up wide opportunities for the development of the dialogue between TRACECA Parties and the international financial markets, as well as transport operators.Around 200 participants from the TRACECA countries, International Financial Institutions and other interested parties discussed the investment prospects and common issues of cooperation. One of the successful outcomes of TIF was the fact that four priority projects identified during the recent process of prioritization found the sources of financing. Actually a part of projects refers to the railway transport. I would like to emphasize particularly the Project for Rehabilitation of the Railway Section Varna-Ruse, of the total cost of 312 million Euros, large-scale and ambitious project for rehabilitation of railways infrastructure in Armenia of the total cost of 200 million Euros. The projects in Kazakhstan present an obvious interest: the construction of a new railway section Beyneu-Shalkar of 485 km long with the budget of 1.096 million USD, electrification of the railway sections Aktoday-Dostik (309 km) and Mojenti-Aktoday (522 km) of the total cost of 546.4 million USD and 788 million USD correspondingly. TRACECA will go on its activities of strengthening ties with financial institutions and developing infrastructure projects for funding purposes. International Financial Corporation, World Bank, European Investment Bank, Japan International Cooperation Agency, as well as European Bank for Reconstruction and Development demonstrated a serious interest towards mutual business opportunities. The Neighbourhood Investment Facility (NIF) and the Investment Fund for Central Asian countries managed by the European Commission are two additional tools to be used in the near future.

Railway Prо: In terms of railway infrastructure, a significant problem remains interoperability. Non-interoperable networks reduce traffic, while interoperable networks boost traffic. What are the technical solutions identified in that respect? Is building a quality transport infrastructure enough in attracting goods flows? What are the TRACECA projects aimed to improve the administrative aspects of the international transport process?

Eduard Biriucov: Joint approach towards integration of national transport systems with the Eurasian transport networks will allow of creating a clearly functioning trans-continental transport system favouring economic development of the countries in the region. This approach is a key link determining actions and efforts of the MLA Parties, including railway sector.
It goes without saying that technical problem of interoperability of railways exists (the issues of harmonization of legislative acts remain in other dimension). The former USSR countries have been using during their history the 1520 mm gauge, whereas the European countries, as well Turkey, Iran, China – the 1435 mm gauge.
Various types of gauge in neighbouring countries of one region complicate traffic and raise its price, impede adequate realization of economic relations and do not favour the development of common configuration of the railways network subject to the perspective increase of traffic volumes.
The special facilities built for wheel pairs exchange at border stations do not reduce the acuteness of this problem in view of low capacity because the processing capacity of transfer points should conform to the incoming car traffic volume loaded with imported and exported cargo and should not allow railway cars lines waiting for transfer in arrival and sorting yards.
Freight traffic technology with transfer or wheel pairs exchange for another gauge (or using cars with sliding wheels) is specified within the framework of special agreements between the railways of the adjacent countries with different gauge. Thereby technical facilities within transfer zones allow transposing bogie exchange car bodies in accordance with technological process of a border station. All handling operations with exported and imported goods including public spaces at a border station are accomplished by means of mechanized handling operations distances and it takes several hours to accomplish these operations.
As regards legal aspects it is necessary to note that within the framework of the TRACECA programme relevant measures were taken in order to streamline border-crossing procedures, to establish hot-lines which contributed to enhancement of coordination of actions directed to further development of international transport which will be able to efficiently service growing freight flows in the Eurasian transport communication. Moreover, the Permanent Secretariat in coordination with the EC worked out the draft Agreement on the Development of Multimodal Transport TRACECA which was approved within functioning Legal Working Group and signed by a number of TRACECA countries in June 2009, at the IGC Meeting, in Issyk-Kul

Railway Prо: Investments in reviving the old “Silk Road” rise to billions of euros. Which projects are expected to be implemented over the next period.)

Eduard Biriucov: Within the framework of TRACECA programme the implementation of all projects is aimed at achieving one single objective – the establishment of a reliable transport system capable to meet present and perspective needs in the transportation of goods and passengers, and provision of competitive transport services by competent specialists of high level qualification conforming to international requirements.

Currently some Technical Assistance projects have been realized, several of TA projects are on-going, including TA projects funded by the EU. The budget of 11 implemented railway transport projects makes 15 million Euros:

– Railways Infrastructure Maintenance (the Caucasus);
– Rolling Stock Maintenance;
– Railways Infrastructure Maintenance (Central Asia);
– Joint Venture for the Trans-Caucasian Railways;
– Railways Tariffs and Timetable;
– Central Asian Railways Restructuring and Telecommunications Studies;
– Restructuring of the Azerbaijan and Georgian Railways;
– Pre-Feasibility Study of a New Rail Link between the Ferghana Valley, Bishkek and Kashgar (China);
– Central Asia Railways Telecommunications;
– Railway Transit Oil Logistic Centre;
– Rehabilitation of Galaba-Termez Railway Line – materials supply for track equipment.

The total amount of the following four Investment projects makes 22, 075, 000 Euros:

– Rehabilitation of the Caucasian Railways;
– Rail Tank Wagon Cleaning Boilers in Baku;
– Supply of an Optical Cable System for Communication and Signaling to the Railways of Azerbaijan, Armenia and Georgia;
– Supply of Tank Wagons to Azerbaijan Railways.

Besides, three were completed three more Investment projects to the total amount of 11, 800, 000 Euros aimed at rehabilitation and improvement of the rail ferry terminal in the ports of Aktau and Ilichevsk and construction of a ferry terminal in the port of Poti.

At the Fifth IGC TRACECA Conference held in Sofia (the Republic of Bulgaria) the participating countries adopted the Strategy of the IGC TRACECA for development of the international transport corridor “Europe-the Caucasus-Asia” for the period up to 2015 drawn up with direct participation of the European Commission. The Strategy defined the objectives of ensuring security, safety and reliability of transport as well as development of transport infrastructure as the priorities for the period up to 2015. In order to achieve optimal operation of railway transport the Strategy envisages carrying out structural reforms, separating infrastructure management from commercial operations, establishing a competitive market of carriers ensuring at the same time open and non-discriminatory access to the main railway system and increasing the efficiency of railway services. On the basis of the studies carried out within TRACECA to determine the state of the railways in the TRACECA countries, various international financial institutions and banks provided credits to the railways administrations. But unfortunately there are still the needs to finance projects within the framework of TRACECA and the participating countries submitted their financial proposals for more than 20 projects in the railway sector which are at present under consideration in the relevant authorities. Among the most significant and perspective projects there should be emphasized the project for construction of an immersed rail tube channel under the Istanbul Strait (4.5 km). This project will provide direct connection between the European and Asian parts of Turkey, thereby ensuring uninterrupted railway connection which was formerly effected by ferries resulting in delays and low capacities.

I would also like to point out the project of the railway section under construction Kars-Akhalkalaki. This railway section will allow the Caucasian and Asian countries to have a direct access across the Turkish territory to Bulgaria and further to other European countries. Though between Georgia and Turkey there is a land border, the railway systems in these countries do not have a technological connection. This project will allow closing a breach in the common network of TRACECA railways. In Central Asia the most significant projects are the construction of the railway line Ferghana valley (Uzbekistan) – Karasu (Kyrgyzstan) – Kashgar (China) across the border at Torugart for Kyrgyzstan and Uzbekistan, construction of the railway section Khorgos-Jetygen in Kazakhstan, as well as the projects of straightening main railway line in the West-East connection. The commissioning of these railway sections will provide for direct railway communication along the main TRACECA routes between Europe and Asia and its branches. The rehabilitation and development of railway infrastructure require informatization of the sector and development of telecommunication systems, introduction of resources saving technologies. Renovation of power supply facilities and railways electrification are assigned a significant place in the infrastructure needs. The relevancy of this task is defined by a considerable difference in the cost of transportation by electric traction and diesel-electric traction (the cost of transportation by electric traction is lower by 60 %). Commissioning of new electrified sections will provide considerable extension of electric locomotives operation zone, increase of the weight and speed of trains service and locomotives efficiency in whole.

Railway Prо: In the context of building other Eurasian freight transport corridors on the Eurasian continent, what is the competition or integration level with these projects?

Eduard Biriucov: The success of the programme is mainly proved by a significant growth of the traffic volumes along the TRACECA transport corridor. On the whole for the last 5 years around 280.0 million tons of various goods were transported in the South-Caucasian direction. Greater share of the traffic falls at oil and oil products. At the same time around 40.0 million tons of other various types of goods were transported for the same period in the Trans-Caspian direction to/from Central Asia along the TRACECA corridor across the Caspian Sea and further through South Caucasus. TRACECA attaches great importance to cooperation with international organizations involved in the development of transport and trade in the region, in the sphere of public private partnership. Coordination of actions between the related programmes and organizations will favour more efficient realization of the set tasks, allow to avoid duplication of actions, optimize the use of resources and focus on the implementation of the most priority and realistic projects as well as to harmonize the decisions of operational or imperative nature.
No doubt, the competitiveness exists. But it should not be forgotten that competitiveness is first of all a perfect stimulus to search for internal resources, an opportunity to find the resources and tools for further development of railway transport in this particular case.

Railway Prо: The TRACECA route crosses countries with different cultural and economic background. How can these gaps be overcome in order to build a successful transport route?

Eduard Biriucov: Initially in the process of the TRACECA programme build-up the priority objective was the creation of favourable conditions for freight transportation. This objective at present preserves its value for all the MLA Parties. Evidently the differences exist. Regarding cultural differences this is not a problem, as culture is indeed the treasure of the peoples. Moreover in the context of globalization the world culture is characterized by interpenetration. Concerning different economic levels I would like to point out that the countries obviously make efforts to contribute to their economic growth. This exerts a considerable influence on the transport sector. I would like to emphasize that the development of transport and a single approach, build-up of a competitive corridor were defined in the Strategy of the IGC TRACECA development up to 2015. The elaboration of this Strategy was an important step for further development of TRACECA. This document could play a key role in the development of multi-vector cooperation between the participating states. As is known, transport development and trade relations enlargement have a multiplicative effect, therefore gradual implementation of the programme would permit to consolidate economic and strategic positions of the member-states and to exert an undoubtedly positive influence on common socio-economic situation in the region. The TRACECA Strategy was drawn up in close cooperation and with support of the European Commission guided by large-scale research in the sphere of regional transport, and taking into consideration the recommendations worked out within the framework of other significant initiatives, as: High-Level Group on the extension of the Trans-European transport network to the neighbouring regions of the EU and the European Neighbourhood Policy (ENPI). Such approach presents an opportunity for successful implementation of the long-term TRACECA Strategy. “From proposals to actions“– this is the motto of the TRACECA Strategy up to 2015. The proposed “strategic framework provides the main guidelines that can direct and orient the process of turning around the TRACECA regional transport system from a state of fragmentation to a state of integration and comprehensively tackles all relevant dimensions of transport, including institutional, regulatory and infrastructure dimensions”. During this period the TRACECA countries will have to realign their existing transport legislations towards international transport conventions and agreements and bring them closer to the EU transport Acquis. The Strategy defined the following objectives up to 2015: ensuring security, safety and reliability of transport as well as development of transport infrastructure as the priorities for the period up to 2015. The main objectives of the Strategy and the MLA define the long-term tasks of gradual implementation of the policy and characterize the activity directed to development of international transit corridor Europe-the Caucasus-Asia.

Railway Prо:TRACECA is a priority of the European Union. The EU is currently planning to recast the TEN-T policy. What impact does the TEN-T recast policy has on the railway transport competitiveness within the TRACECA project?

Eduard Biriucov: This aspect is being considered by TRACECA. We concentrate our efforts on the drafting of economically expedient trans-boundary projects aimed at the development of transport infrastructure. In the course of drafting the projects should be studied taking into account their role and impact on a regional scale. We would not like to present the European policy TEN-T as antagonistic to the TRACECA interests. Let me bring your attention to the fact that the TRACECA programme, all activities within its framework are coordinated with the European structures. It is natural that within these projects preparation the tendencies in the European policy in the field of transport are given due consideration. The Intergovernmental Commission TRACECA is striving for the development of efficient and reliable Eurasian transport links, creation of competitiveness and attractiveness of the Europe-the Caucasus-Asia corridor, as well as for ensuring joint activities with the interested financial institutions which could facilitate the solution of the issues related to removal of transport barriers along the line of international transport. In order to eliminate the bottlenecks and to build missing straightening links there are implemented joint EU-TRACECA technical assistance and investment projects. Moreover, we suppose that for the sake of ensuring the competitiveness of railway transport along the TRACECA corridor we should pay attention to the factors favouring the dynamic development of land and sea constituents of the corridor. This is an intensive development of the routes passing across the TRACECA countries, including the construction of missing and new “straightening” transport links within the corridor in the near future; further development of container traffic along the route Poti (Georgia) – Baku (Azerbaijan) – Aktau – Almaty (Kazakhstan) extended to China; expansion of container flow along the existing ferry lines Varna (Bulgaria) – Ilichevsk (Ukraine), Varna – Poti/Batumi (Georgia), Ilichevsk – Poti/Batumi and Ilichevsk – Deringe (Turkey) as well as the perspective line Constanta (Romania) – Samsun (Turkey), Samsun – Batumi/Poti; construction of a grain terminal in the port of Poti which will allow to harmonize grain terminals in the port of Aktau with the newly opened terminal in Baku port and in other ports in a single transport chain.

Railway Prо: Considering the fact that the Railway Days WBSA 2011 Summit, held in Bucharest on October 4-5, 2011, will approach the problem of infrastructure and freight traffic on the West-East axis, what are the business opportunities and the challenges for developing the West-East rail transport?

Eduard Biriucov: First of all, I would sincerely like to wish you success in the “Railway Days” Summit activity. The task of this forum is indeed very important, ambitious, but at the same time it is complicated. We told you about the projects to be implemented within the framework of the TRACECA corridor. I would also like to stress that a number of the on-going and future technical assistance projects financed by the European Union within the framework of the TRACECA programme are intended for carrying out one of the key tasks of transport: ensuring security of operations and safety of goods, including the railway transport. In this connection we suppose that in the near future TRACECA will be in position to come up to its European partners’ expectations regarding supply of commodities to Central Asia and to meet the demands in freight traffic along the whole length of the TRACECA corridor.

Recorded by Pamela Luică

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