New government of Armenia to continue construction of North-South highway

The new government of Armenia intends to continue the construction of the North-South highway project.

The project, which aims to connect the north of the country to the south, began in 2012, but only one of five sites has been commissioned so far. The authorities will have to find financing in order to complete construction, which will most likely have to be funded by international lenders.

“It would be senseless now if someone makes a statement about the timing of the construction of the road. We can talk about this only when we completely resolve the issue of financing and also when we receive all the data on preliminary measurements and calculations,” said the Minister of Transport, Communications and Information Technologies of Armenia, Ashot Hakobyan.

Hakobyan also said that one kilometre of the North-South road will cost US 3.6 million, and in complex areas the price could reach up to US 12 million. Even according to the most conservative estimates, the 490 km long highway will cost more than US 2 billion.

“The preliminary costs of the project was estimated to be about US 1 billion, but it is clear to all that this amount will increase because we want to get first class roads, and also because we have a large number of tunnels and bridges, especially in the Sisian area. We must do everything possible to complete the road. It will be of great economic importance for us. The highway from the north will connect us with Georgia, and the south with Iran. Armenia can become a transit country,” Hakobyan said.

Armenia is building the North-South highway via funds from creditors, with the bulk of the funds lent from the Asian Development Bank. Armenia started repaying the loan in 2015.

Vahe Davtyan, a specialist in energy, security and transport, believes that the project lost its original attractiveness as a result of the sharp increase in cost:

“When it was about 960 million dollars, the project was attractive. Now, when it comes to 2 billion dollars, the question arises as to whether it is appropriate to take on such credit obligations, especially in the face of large external debt.

Today in Armenia there are a number of projects that have strategic, geopolitical significance. They could provide a more significant economic effect. We are talking about the construction of a nuclear power plant and the Armenia-Iran railway.”