Business | Investment

Dubai investment firm wins $3b transport project

Tripartite agreement involves officials of Armenia, Iran and Rasia FZE

  • By Saifur Rahman, Business Editor
  • Published: 22:11 January 24, 2013

Dubai: A Dubai-based investment company, Rasia FZE said that it has been awarded a railway and a highway project estimated to cost $3 billion (Dh11 billion) in a tripartite agreement involving officials of Armenia, Iran and Rasia FZE.

Among the projects, Southern Armenia Railway is anticipated to be a 316 kilometres long electrified single track railway, which will connect Gavar, near Lake Sevan, to the southern border of Armenia by Meghri and will be integrated with the existing central railway system of the Republic of Armenia, operated by South Caucasus Railway CJSC and the operating railway system of Iran. 

The Southern Armenia High Speed Road, to be constructed in Armenia's southern province of Syunik, is anticipated to be a 110 kilometre long expressway connecting Sisian to the southern border of Armenia by Meghri.

Gagik Beglaryan, Armenian Transport and Communication Minister launched the Southern Armenia Railway and Southern Armenia High Speed Road Projects during a recent signing ceremony attended by senior government officials, ambassadors, investment and sovereign funds, and corporate executives from Armenia, China, Russia, the UAE, and Iran.

Both projects will form a part of the International North-South Transport Corridor, which will play a pivotal role in improving regional connectivity and driving economic growth along the corridor, and will create the shortest transportation route from the ports of the Black Sea to the ports of the Arabian Gulf, the company said in a statement. 

“When the projects are completed, transport costs and times for the region are expected to improve substantially, fostering greater regional trade and economic growth while dramatically strengthening the Armenian economy,” a Rasia spokesperson said.

Analysts say the initiatives will help boost regional trade from the GCC, especially from Dubai. "As the Gulf is increasingly becoming important in feeding the consumers of Central Asia, the implementation of these projects will help regional trade grow at a faster pace and Dubai - the most connected economy in the region - stands to gain most from re-export activities," said an economist, requesting anonymity. "That probably explains why the investment firm was set up in Dubai."

Dubai is home to a good number of wealthy Armanian businessmen and professionals. However, not much is known about the company, Rasia.

Rasia said, it has also entered into an agreement with Hayah Resources, a global natural resources investment group backed by ultra-high net worth families in the GCC and chaired by UAE businessman Rashid Al Malik. The investment group will focus on mineral investments along the corridor and the development of the railway and high speed road projects. 

“In 2012, the Republic of Armenia signed with Dubai-based investment company, Rasia FZE, two concession agreements for the vitally important transport projects in order to develop them on a Public-Private Partnership basis,” he said.  “The concession terms provide specific periods for completing feasibility studies, engineering designs, project financing and construction and are followed by a 30-year operating period, renewable by Rasia for an additional 20 years.”

Among other strengths, the concession terms confer upon Rasia the right to freely establish freight rates and tolls while providing protection from competing projects, the company claims.

Joseph Borkowski, Chairman and CEO of Rasia, said: "As the key missing link in the International North-South Transport Corridor, the projects have attracted significant regional interest from both strategic and financial partners waiting to participate in their development." 

Rasia is already implementing a consortium-based strategy for the feasibility, design, financing, development and operation of the projects, he said.

Rasia has recently signed framework and commercial agreements with China Communications Construction Company Ltd, one of the world leading companies involved in railway, high speed road, tunnel, bridge, and port construction, to become the lead member of the development consortium. Feasibility study works commenced on December 31, 2012.

Viktor Rebets, Director-General of South Caucasus Railway, said: "During 2008 to 2012, our investment program exceeded $225 million which was allocated by Russian Railways OJSC. A massive reconstruction programme of railway infrastructure was implemented using these funds including track and station facilities, systems of electrification and power supply, communication, centralisation and blocking."

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