Azerbaijan's President Ilham Aliyev

Georgia to construct railway with $575m Azerbaijan loan

Georgia will build a new railway to transport goods between Europe and Asia with the help of a $575m loan from Azerbaijan.

The Kars-Tbilisi-Baku railway, between Turkey, Georgia and Azerbaijan will be completed in 2013 and will have an initial annual capacity of 6.5 million tonnes.

The railway project follows the construction of oil and gas pipelines, which have turned the three countries into a strategic energy corridor.

No direct rail connection currently exists between Georgia and Turkey, a legacy of the Cold War when the border was a front line between NATO and the Soviet Union.

Goods moving overland through the region, a historic trade crossroads that was part of the ancient Silk Road, have to travel along potholed roads or travel through Iran to the south and Russia to the north.

The Azeri Transport Ministry and the Georgian company Kartsakhi-Marabda signed a credit agreement for the 25-year $575m loan in Baku, Azerbaijan's capital, this week.

In ex-Soviet Georgia the project will involve the construction of a new 29km stretch of the railway and the reconstruction of an old 183km section.

The project's total cost is estimated at $1-1.2bn, while the railway's maximum capacity is 17 million tonnes.

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