Turkmenistan: North−South Railway Project

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Lessons

SSelecting a sector of strength and having strong government backing and ownership enhances the value addition of Asian Development Bank− (ADB) financed projects.

ADB selected a sector of strength and a project with strong government backing and ownership for its first lending operation in Turkmenistan. It purposely kept the project scope to the design, procurement, and installation of signaling, power supply, and telecommunication systems to expose Turkmenistan to international competitive bidding which would be of clear value to the country, and where ADB’s technical advice would promote innovation. Given the government’s unfamiliarity with ADB safeguards policies, explicit consideration was also given to scoping the project in a manner that would not involve land acquisition and resettlement. Overall, the careful thought ADB gave to the scope and focus of this project facilitated the delivery of outputs that added value to the construction and operation of the pre-planned north−south railway line. Approved by ADB soon after Turkmenistan joined ADB’s Central Asia Regional Economic Cooperation program in 2010, the project’s high value addition also extends to the CAREC, which has designated the project railway line as part of CAREC Corridor 6, connecting Europe, the Middle East, and South Asia through Central Asia.

Project Cycle Stage:

Preparation

Supportive national regulations and legislation are required to expedite the preparation and implementation of projects funded by international financing institutions (IFIs) like ADB.

The project enabled ADB to gain better understanding of Turkmenistan’s internal regulations and legislation, some of which need to be improved to enhance future project preparation and implementation. For example: (i) the registration of contracts and contract variations by the Turkmenistan State Commodity and Raw Materials Exchange should be shortened; and the review and approval by multiple agencies, which lengthened the registration process under this project to 2–3 months, needs to be assessed; (ii) the visa requirements for foreign experts, including IFI staff, consultants, and contractors should be amended to prevent the unnecessary work disruptions encountered, for instance, by the project management consultants for this project, whose applications for multiple entry visas with 6 months validity were consistently rejected, prompting them to instead use visas with 1 month validity, an arrangement that forced them to go on fieldwork only for 3 weeks and spend 1 week in their home countries waiting for the next visa; and (iii) importation of project goods and commodities needs to be given special consideration, with customs clearance reduced to the shortest time possible. ADB should as well consider these constraints as it takes on more projects in Turkmenistan.

Project Cycle Stage:

Preparation

Implementation

Background

In October 2007, the government of Turkmenistan signed a multilateral agreement with Kazakhstan and Iran to construct a north–south railway line to promote regional trade, cooperation, and integration. Under the agreement, Turkmenistan committed to connect with its northern and southern neighbors through a new single track, non-electrified 934.5 kilometers (km) railway line between Uzen in Kazakhstan and Gorgan in Iran. The railway will have two parts: a 596 km-long northern section that would connect Uzen and Bereket in Turkmenistan, and a 338.5 km-long southern section from Bereket to Gorgan.

At the request of the Turkmenistan government, the Asian Development Bank (ADB) approved a $125 million loan for the North−South Railway Project in March 2011. The project was to cover the design, procurement, and installation of the power supply, signaling, and telecommunication systems for 311 km of the railway’s northern section. Its anticipated impact was increased trade between Turkmenistan and other countries in the region. Its intended outcome was the development and operation of an efficient, safe and reliable railway transport network in Turkmenistan. It had three planned outputs: (i) safe and efficient movement of trains with the installation of signaling, power, and telecommunications systems; (ii) tracks are well maintained and kept safe; (iii) support provided for project management and Ministry of Railway Transport (MRT) institutional capacity improvement.

At completion, the project designed and installed two 10-kilovolt overhead power lines along 311 km of the rail line. An electronic interlocking signaling equipment, with light emitting diode-lit color lighting for all types of signals was set up. A communication system between stations, aboard the locomotives, and for long-distance use were also installed. All targets related to power supply, signaling, and telecommunications were met, albeit, covering only 288.2 km of the rail line because government already completed some installations ahead of time.

To support output 2, the project provided a ballast cleaning machine and two sand removal machines. Both types of machines are typically used to maintain the safe and efficient operation of railways in arid desert regions. To meet output 3 targets, a project performance and monitoring system was installed, and relevant MRT staff were trained in key aspects of project and sector management and operation.

Project completion was delayed for four years, mainly because of the delayed procurement and completion of the turnkey contract for output 1, which stemmed from difficulties in meeting complex government internal procedures and regulatory requirements, such as for approval of contracts and contract variations, work visas, and customs clearance. Notwithstanding this, the project delivered all its planned outputs and substantially achieved its outcome targets. By its third year of operation in 2018, total national transit tonnage rose to 6.4 million and annual minerals traffic reached 2.2 million tons. As of project completion review, indications were strong that the project will be able to significantly help reduce transport-related carbon emissions by 2020. While improving population mobility, the project also contributed to an increase in Turkmenistan’s foreign trade from $14.5 billion in 2015 to $20.6 billion in 2016.

The MRT, with support from an international project management consulting firm, executed the project.

Project Information

Project Name:

North–South Railway Project

Report Date:

July, 2018

Main Sector:

Transport

Country:

Turkmenistan

Project Number:

43441-013