World Bank recommends Azerbaijan Railways continue tariff reforms

Azerbaijan Railways CJSC (ADY) plays a strategically important role in the Middle Corridor, also known as the Trans-Caspian International Transport Route (TITR), but needs to continue reforms in tariff policy and corporate governance, according to the World Bank.

The World Bank estimates that the recommendations are aimed at improving the efficiency and transparency of railway operations along the corridor, Caliber.Az reports, citing local media.

Azerbaijan’s railway network extends for 2,100 km and carries approximately 18.5 million tonnes of freight annually.

The World Bank recommends that ADY adopt a cost-to-serve pricing model to provide greater transparency for international shippers. It also proposes introducing commercial financing mechanisms to attract private investment in the modernisation of rolling stock and infrastructure, as well as signing long-term public service obligation (PSO) contracts with the state to clearly distinguish commercial operations from social transport obligations.

Optimising logistics processes and shifting part of regional freight flows to rail and efficient maritime transport along the Middle Corridor could reduce greenhouse gas emissions from regional freight transport by 3.2% by 2040.

The report also highlights the vulnerability of corridor infrastructure to climate risks and natural hazards, including landslides, extreme heatwaves and fluctuations in Caspian Sea water levels.

According to World Bank estimates, a potential five-day disruption at the Port of Aktau caused by weather or technical problems could result in direct and indirect losses of millions of dollars for households and businesses across the region.

The World Bank therefore recommends that all new infrastructure projects along the corridor be developed in accordance with climate resilience standards.

By Bakhtiyar Abbasov