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Transport Sector Development Strategy (Financed by the ADB Technical Assistance Special Fund)

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Transport Sector Development Strategy (Financed by the ADB Technical Assistance Special Fund) Technical Assistance Consultant’s Report Project Number: 4061002 November 2008 Armenia: Transport Sector Development Strategy (Financed by the ADB Technical Assistance Special Fund) This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design. Asian Development Bank TA 4973-ARM Ministry of Transport and Communication Republic of Armenia Armenia Transport Sector Development Strategy 2020 Final Report in association with Yerevan, November 2008 Armenia Transport StrategyGeorgia 2020 Georgia Bagratashen Bavra Gogavan AH 81 M 3 AH 82 Dilijian Gyumri Vanadzor Azerbaijan Gavar AH 82 AH 81 Ashtarak Armenia Sevana Lake YEREVAN AH 81 Artashat Turkey AH 82 Yeghegnadzor Capital Goris Airport Azerbaijan Body of Water Road Kapan AH 82 Railroad Agarak International Corridor City Border Point Iran Boundaries are not necessarily authoritative Kilometers 0 25 50 100 Abbreviations and Acronyms AADT annual average daily traffic HWTSK Harral Winner Thompson Sharp Klein ADB Asian Development Bank IATA International Air Transport Association ADR Agreement Concerning the International ICAO International Civil Aviation Organization Carriage of Dangerous Goods by Road IFI international financial institutions AEPLAC Armenian-European Policy and Legal IFRS International Financial Reporting Advice Centre Standards AETR European Agreement Concerning the ILS Instrument Landing System Work of Crews of Vehicles Engaged in IMF International Monetary Fund International Road Transport IT information technology AGR European Agreement on Main JAA Joint Aviation Authorities International Traffic Arteries JICA Japan International Cooperation Agency AH Asian Highways KATB Kars-Akhalkalaki-Tbilisi-Baku AIA Armenian international airports km kilometer AMD Armenian dram kph kilometer per hour ANS Air Navigation System kV-DC kilovolt direct current ARD Armenian Roads Directorate LAN local area network ARMATS Armenian Air Traffic Service LGU local government unit ASIF Armenian Social Investment Fund LLC Limited Liability Company ATC Avia Training Centre LRNP Lifeline Roads Network Program ATM Air Traffic Management m meter ATP Agreement on the International Carriage M&E monitoring & evaluation of Perishable Foodstuffs and on the MAK/IAC Interstate Aviation Committee Special Equipment used for Such MCC Millennium Challenge Corporation Carriage MIS management information system BRT bus rapid transit MNP Ministry for Nature Protection BSEC Black Sea Economic Cooperation MOE Ministry of Economy CAPS Competitive Armenia Private Sector MOED&T Ministry of Economic Development and CD Capacity Development Trade CIM Uniform Rules Concerning the Contract MOTC Ministry of Transport and Communication for International Carriage of Goods by Rail MTA Ministry of Territorial Administration CIS Commonwealth of Independent States MTEF Medium-Term Expenditure Framework CIV Uniform Rules Concerning the Contract NATO North Atlantic Treaty Organization for International Carriage of Passengers NAS National Academy of Sciences and Luggage by Rail NASP National Aviation System Plan CJSC Closed Joint-Stock Company NGO non-government organization CMR Convention on the Contract for the NRSC National Road Safety Council International Carriage of Goods by Road NSS National Statistics Service CNG compressed natural gas OSJD Organization for Railway Cooperation COTIF Convention Concerning International P&E Program and Evaluation Carriage by Rail PIU project implementation unit CPI Consumer Price Index pkm passenger kilometers DC direct current PPP private public partnership DGCA Directorate General of Civil Aviation PRSP Poverty Reduction Strategy Paper EASA European Aviation Safety Agency PSP private sector participation EBRD European Bank for Reconstruction and PSRC Public Service Regulatory Commission Development RMA Railway Monitoring Agency ECA Europe and Central Asia ROW right of way ECAC European Civil Aviation Conference RZD Russian Railways ECMT European Conference of Ministers of SCR South Caucasian Railway Transport SEEC State Environmental Expertise EIA environmental impact assessment Commission EMU electric multiple unit SID Standard Instrument Departure EO environmental officer sq square ESA equivalent standard axle SCJSC State Closed Joint-Stock Company ESCAP Economic and Social Commission for STAR standard arrival routes Asia and the Pacific SUT sustainable urban transport EU European Union t ton GDCA General Department of Civil Aviation TA technical assistance GDP gross domestic product TACIS Technical Assistance to Commonwealth GRM Shirak Airport of Independent States GTZ German Agency for Technical TDCP Tourism Development Concept Paper Cooperation (Deutsche Gesellschaft für TEM Trans-European Motor Highway Technische Zusammenarbeit) TER Trans-European Railway HR human resources TIR Transports Internationaux Routiers i tkm ton kilometers UNFCCC United Nations Framework Convention on TP Traffic Police Climate Change TRACECA Transport Corridor Europe Caucasus USAID United States Agency for International Asia Development UNCBD United Nations Convention on Biological US United States Diversity USSR Union of Soviet Socialist Republics UNCLOS United Nations Convention on Law of the UT urban transport Sea WAN Wide Area Network UNDP United Nations Development Programme YM Yerevan Municipality UNESCAP United Nations Economic and Social YUTP Yerevan Urban Transport Project Commission for Asia and the Pacific ZVR Zvartnots Airport UNECE United Nations Economic Commission for Europe Note: $ = United States Dollar $1 = AMD 305. VAT (@ 20%) is excluded from costs, unless stated otherwise. ii EXECUTIVE SUMMARY Location, topography, and geopolitics present a particular transport challenge in the Republic of Armenia (Armenia) situated in the strategically important southern Caucasus. With an average elevation of 1,800 meters (m) and a severe climate, very low winter temperatures, heavy snowfall, and high intensity rainfall are experienced throughout the country, including in key transport routes. The combination of these factors results in high transport costs and expensive infrastructure maintenance and development. The infrastructure legacy after independence was substantial in terms both of network coverage and capacity. Transport infrastructure had deteriorated in the difficult years after independence because maintenance was deferred due to lack of funds. Globalization presents both challenges (such as increasing demands for more complex logistics and more timely transport services and reductions in transport costs) and economic opportunities. The Government of Armenia (the Government) has achieved impressive economic performance in the past several years despite substantial challenges experienced after independence and the rather limited resources under a small government model, while keeping its fiscal management and external borrowing prudent. It has also substantially transformed transport sector management from wholly a public sector responsibility to a largely privatized operation. Starting from the mid-1990s, it has actively mobilized external financing to restore transport infrastructure. Furthermore, the Government has strengthened economic relations with other countries by improving the business environment to promote investment and exports. The Armenia Transport Sector Development Strategy 2020 (the Strategy) pursues improved management, infrastructure, and technology to maximize the transport sector’s performance until 2020, and envisages a long-term prosperity through the establishment of efficient, cost effective, and environmentally and socially sustainable transport infrastructure and services. The Strategy has been developed, based on past achievements, to respond to the present and future transport sector-related challenges and capture the potential opportunities in the current and future global markets. It has also been developed, bearing in mind the increasingly challenging outputs that the Government must deliver in the context of limited resources and the Government's prudent fiscal and external borrowing policies. The Strategy encourages partnerships within the Government and with external financing institutions as well as with the private sector to attain the Strategy's vision. The Strategy entails an Action Plan for the Strategy (the Action Plan) which comprises a time-bound program of policy reforms and investment and technical assistance projects identified for 2009-2020, totaling about $2.2 billion. Like other countries in the world, the global financial crisis that started in late 2008 will likely slow economic growth in Armenia. The years ahead will inevitably be a challenging period for the Government. However, the global financial crisis and possible fiscal and external financing constraints (including financing provided by the Armenian Diaspora) will require the Government to pursue the Strategy more progressively—effectively targeting high priority investments together with intensified transport and trade facilitation coordination within the Government and with Armenia's neighboring countries in order to achieve quick and cost effective returns from limited resources. Removing impediments to transport and trade in a cost-effective manner is essential to ensure sustainable, inclusive economic development and business
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