THE LONG ROAD

A good road network is one of the most important indicators of a country's level of development. Today both the quantity and quality of roads are significant for a country that is joining the European Union. It's no secret that Azerbaijan intends to become an EU member, so the state of the roads and the development of the road infrastructure are a cornerstone for the government which is spending huge sums on roads out of its oil and gas income. And no wonder when Baku has more than 2,200 km of roads, 70 to 80 per cent of which are obsolete.

Money at work

The public are already sick of roads that have become unusable (or are becoming unusable) while the small number of interchanges is causing many traffic jams on the capital's roads. In November 2006 Azerbaijani President Heydar Aliyev signed a decree "On additional measures relating to the construction and repair of regionally important roads in connection with the socio-economic development of the regions". The document said that the condition of regionally important roads and roads that are the responsibility of the local executive authorities do not fully meet the demands of dynamic socio-economic development and the needs of the people. One of the main reasons is the lack of the necessary equipment to maintain roads and the poor quality of existing equipment. In order to ensure future effective work on the construction, maintenance, repair, reconstruction and use of roads the president instructed the Cabinet of Ministers to draw up and present within a month a State Programme to Renew and Develop the Republic's Road Network in 2006 to 2015. Since 2006 the state budget has included expenditure on bringing roads up to scratch.

The volume of foreign financing is also increasing. For example, 85.5 per cent or $2.2bn of the $2.6bn in foreign credits attracted in the first quarter of 2008 are being spent on financing investment projects in Azerbaijan. A not insignificant sum - 18.1 per cent or $471m - is allocated to road construction and transport projects.

However, this is still small change as far as the development of the road infrastructure is concerned. Deputy Transport Minister Musa Panahov said that this year alone the volume of capital investment in the Azerbaijani transport sector will be $2bn. "These funds have been earmarked for road and airport infrastructure projects," Musa Panahov said.

In the last two years alone the volume of investment in transport has exceeded $1bn while in the next five years the country is planning to invest another $7bn.

Musa Panahov said that the Transport Ministry is at present drawing up a blueprint for these investments. The funds will mainly be spent on developing roads and railways, buying new ships and other infrastructure. Funds will come from the budget, credits and even the resources of economic entities. 

In other words, capital investment in the Azerbaijani transport sector is increasing dynamically. In 2004 the state budget allocated 136m manats to development of the transport infrastructure, while today the figure is 500m manats. The head of the ministry's secretariat, Namiq Hasanov, commented, "This is a very high figure for Azerbaijan and even for several CIS countries." 

"The increase in capital investment in the transport sector is connected to the implementation of major projects in the country which are unique in the post-Soviet area," Hasanov continued.

Expensive but high quality

On 10 May a new, six-lane, 29.5-km, concrete highway was opened in Baku, connecting Heydar Aliyev International Airport with the Zig road. The project includes four crossings and two bridges. The latest German technology was used in the road construction which many drivers have already been able to see for themselves. Its construction cost the Transport Ministry 171m manats.

On 20 May Azerbaijani construction companies began a project to build a 120-km highway from Baku to Quba and the Russian border. The concrete road will have two lanes, 14 metres wide. Work has begun on kilometre 16 of the road. The road will come into use in October this year.

These expensive projects are evidence that the Transport Ministry has changed the concept for the reconstruction of the country's major roads. The usual asphalt used to be the panacea for all ills but has now given way to more expensive but much more functional concrete. Laying one kilometre of solid concrete road costs $1m more, but savings of $1m can be made on every 100 kilometres over the 30 years of the road's life. This has led to an increase in spending on the reconstruction of Azerbaijan's road network from 3.4bn to 5-6bn manats (more than $7bn). 

North-south and east-west

The new concept begins with the modernization of the road segment in the North-South transport corridor. Alongside the existing roads four-lane highways will be constructed. Reconstruction of the 195-km road from Baku to Iran and the 198-km road to the Russian border will be completed in 2010.

We have already mentioned foreign loans to complete road projects. On 29 April this year the World Bank board of directors confirmed the extension of an additional $300m credit to Azerbaijan to improve the road infrastructure. The funds have been loaned under World Bank conditions for 40 years including a 10-year grace period. The additional credit is to be used to build and reconstruct the 112-km Alat - Masalli road and the 41-km road from Tagiyev settlement to Sahil. The reconstruction of 200 kilometres of local roads is also planned.

The project to improve Azerbaijan's road infrastructure costs $505m overall. The World Bank credit is $300m and the remaining $205m will be allocated by the Azerbaijani government.

Two road projects are under way at present in Azerbaijan, funded by a World Bank credit of $240m. As part of its 2007-2010 cooperation strategy the World Bank is ready to invest up to $500m in improving Azerbaijan's roads.

In October 2007 the board of directors of the Asian Development Bank approved a multi-tranche financing facility of $500m to fund road network reconstruction projects in Azerbaijan. The credit has been provided to support the State Programme for the Development of Roads in 2006-2015. The investment component of the programme includes construction, modernization and restoration of around 9,500 km of 124 priority roads. The Asian Development Bank is providing funding in stages. The first part of the credit, $200m, is to be spent on the construction of a new, high speed, 59-km road from Masalli to Astara, including the construction of weighing stations on the highway, restoration of local roads and the maintenance and development of the road network management system.

The bank had previously allocated $52m to fund reconstruction of the 88.8-km section of the Ganca - Yevlax road and construction of a 38-km Qazax - Georgian border road.

In all the Asian Development Bank will finance the reconstruction of 127 km of major roads and 65 km of local roads.

The volume of foreign investment in the road infrastructure is constantly increasing. In 2007 foreign investment in the sector was $99.3m but this year is expected to be $250m. As well as cooperating with the World Bank and Asian Development Bank on road projects, Azerbaijan is also working with Korea's Woori Bank, France's BNP Paribas, the Islamic Development Bank, the EBRD and others. 

Azerbaijan is also carrying out several projects as part of the strategy to expand international road freight which envisages the modernization of the transport corridors crossing the republic. The North-South road is an example. While the Azerbaijani segment of the corridor will be completed in 2010, reconstruction of the highway from Baku to the Georgian border (the TRACECA or Silk Road corridor) will be completed next year. All the major roads will have four lanes.

Work on the east-west roads is costing around $800 million, more than half of which is coming from the World Bank. TRACECA is a priority for the country. The project includes construction of the Baku - Tbilisi - Kars railway which is expected to carry more than 10 million tonnes of freight per year. 

Another priority is the development of the Baku - Tbilisi - Poti - Ilichevsk - Kiev - Chisinau corridor as part of GUAM, the regional association of Georgia, Ukraine, Azerbaijan and Moldova.

Only growth

All these projects will of course boost growth in the country's transport sector. Over the past five years the transport sector has already grown annually by around 12 per cent on average which is one of the highest figures worldwide. According to government forecasts, by 2011 freight transport will increase to 212 million tonnes annually, which means millions of transit dollars coming into the state's coffers.

This is not all. The Transport Ministry's future projects include the construction of additional transport intersections - roads, flyovers, pedestrian subways, roundabouts - the purchase of new buses and the creation in 2009 of an intelligent traffic management system in the capital with a single control centre. South Korea will help the ministry to complete this ambitious project which will cost $55m.

The ministry is also holding talks and discussing the financing of a $1.4bn-project to build a bridge across Baku bay. The main part of the bridge over the sea from Sixovo to Zikh will be 13.5 to 15 km long. Construction will take around five years. The bridge, which will be linked to the Baku ring road, could reach 26 km in length overall, including feeder roads. This would make the bridge the second longest in the world, after a Chinese bridge.

There are plans for three roads around Baku and already in 2009-2011 the city will no longer be overloaded with road traffic, according to the Transport Ministry.