Azerbaijan: Baku Agrees to Lend $100 Million to Georgian Railway

Baku has promised Tbilisi $100 million this year to help link the Turkish and Azerbaijani railways via Georgia.

Shakhmar Movsumov, executive director of the State Oil Fund of the Republic of Azerbaijan (SOFAZ), said that the money will arrive after construction work begins on the Georgian section of the Baku-Tbilisi-Kars railway, the Day.az news site reported.

In total, Baku earmarked more than $200 million from its oil fund to lend to Tbilisi at a bargain interest rate of 1 percent per year to construct the 30-kilometer Georgian section of the 100-kilometer line, according to the SOFAZ website. The loan, repayable in 25 years, will also be used for a border facility to convert the Russian-style tracks used in Georgia to the standard gauge used by Turkey.

The project, intended to provide a new conduit for petroleum product exports from Baku, is entirely sponsored by Azerbaijan and Turkey. International sponsors backed away from financing the project since it bypasses Armenia, Azerbaijan's longtime adversary.