Armenian Railways: What's Happening with the South Caucasus Railway Concession - 7 Key Facts

YEREVAN, September 2. /ARKA/. The future of Armenian railway management has gradually evolved from a technical dispute into a prominent item on the Armenian-Russian economic agenda.

Yerevan claims that the current concession model could hinder the country's integration into new international transport routes, while Moscow emphasizes the scale of investments already made and its intention to implement the current agreement. Against this backdrop, Armenian Prime Minister Nikol Pashinyan proposed considering transferring concession management rights to a third country, while Russian President Vladimir Putin invited him to continue substantive discussions on the transport and investment agenda in Moscow.

ARKA has compiled seven key facts that provide insight into the developments surrounding the South Caucasus Railway.

Fact 1. The Armenian Railway has been under Russian concession management since 2008.

The concession agreement between the Armenian government and Russian Railways was signed on February 13, 2008. The railway infrastructure is managed by South Caucasus Railways CJSC, a wholly-owned subsidiary of Russian Railways.

The concession management term is 30 years, until 2038, with the agreement providing for an extension for an additional 10 years.

The railway infrastructure itself remains the property of the Republic of Armenia.

Fact 2. In 2026, Yerevan raised the issue of changing the current model.

A new phase of discussions began in February 2026. Pashinyan stated that Russian management of the Armenian railway, in the current international environment, was becoming a problem for the country in terms of the competitiveness of transport routes.

In August, Pashinyan elaborated on this position, stating that sanctions against Russia were forcing international investors, freight carriers, and trade participants to view working with Russian-managed infrastructure as a risk and to choose alternative routes.

The issue is particularly pressing given new transport projects in the region and plans to connect Armenia to the international rail network.

The Armenian government's 2026-2031 program, approved in August, already explicitly provides for a revision of the railway management system so that it does not hinder the country's integration into the international transport system.

Yerevan has repeatedly emphasized that it prefers to reach an agreement with Moscow rather than unilaterally terminate the agreement.

Fact 3. Russia claims over 30 billion rubles in investment

The Russian side claims that since the concession agreement was signed, the volume of investment in the Armenian railway system has exceeded 30 billion rubles.

This figure was cited by Russian officials in 2026. Russian Railways head Oleg Belozerov also stated that investments from Russian Railways funds and revenues from the South Caucasus Railway amounted to approximately $396 million from 2008 to 2025.

The Russian side emphasizes that no dividends were paid to shareholders, and that profits were used for railway development.

Therefore, Moscow states that in the event of a change or termination of the concession agreement, the issue of repayment of investments made must be taken into account in settlements between the parties. Fact 4. $2 billion is not the cost of the concession.

Another figure that emerged in the discussion was approximately $2 billion.

On July 30, Pashinyan, speaking about a possible legal dispute with the Russian side and international arbitration, suggested a situation in which Armenia itself could make financial demands for something for which it had previously made no demands for decades.

In this context, the prime minister mentioned a figure of approximately $2 billion per year.

However, this did not refer to the invoice already presented to Russia, nor to the established compensation amount, nor to the cost of the concession itself. Rather, it referred to a hypothetical possible payment of approximately $2 billion per year. Pashinyan voiced this figure during the same briefing in which he raised the possibility of going to arbitration, but did not present it as a calculated claim or the amount of a future lawsuit.

The Russian side called the idea of ​​additional payments unfounded and, for its part, pointed to its right to demand compensation for investments made in the event of a unilateral change to the terms of the contract.

Fact 5. Pashinyan estimated the possible price of transferring the concession right at approximately $400 million.

Pashinyan cited a completely different figure on August 24.

According to his estimate, there is currently a possibility of selling the concession right to manage the Armenian railway to a third party for approximately $400 million.

Later, the prime minister clarified that this refers to ongoing working and verbal discussions. According to him, a range of approximately $350–400 million is being considered, but there is no written offer from an investor to purchase the concession for $400 million yet.

Therefore, $400 million should not be considered an agreed-upon price for the transaction, but rather a discussed benchmark for the potential value of the concession management right.

Fact 6. Pashinyan mentioned Kazakhstan, the UAE, and Qatar as possible third-party options.

Back in February, Pashinyan proposed a model under which the concession management right could be purchased from the Russian side by a third country that maintains good relations with both Armenia and Russia.

The prime minister cited Kazakhstan, the United Arab Emirates, and Qatar as examples.

However, these countries should not be considered official concession bidders. Pashinyan cited them as examples of states that could theoretically meet the proposed formula.

There are currently no publicly confirmed agreements to purchase the concession right from any of these countries.

Fact 7. Putin proposed continuing the railway discussion in Moscow.

The railway issue is now reaching a new level in the Armenian-Russian dialogue.

After meeting with Pashinyan on the sidelines of the SCO summit in Bishkek, Putin announced that he had invited the Armenian prime minister to Moscow to discuss specific areas of cooperation in detail with specialists from both countries.

Among the issues, the Russian president specifically mentioned the railway, its development, and investment in infrastructure.

Putin linked the prospects for new investments primarily to future traffic volumes, noting that the situation could change significantly with the opening of new transport routes and borders.

However, it has not yet been announced that the Moscow talks will specifically focus on the sale of the concession or that the parties have already agreed on the mechanism for its transfer.

Therefore, the current discussion is not about a ready-made solution for the South Caucasus Railway, but rather about negotiations around a new model: Yerevan wants to eliminate the risks that hinder Armenia's inclusion in international transport routes, while Moscow wants to preserve its economic interests and take into account previous investments. Thus, the railway and its further development have already been named by the Russian side among the specific issues that Moscow proposes to discuss in detail with Yerevan.