On 23 September, the Russian RTVI reported through a source familiar with the process of negotiations between Armenia and the Russian Railways state corporation, that Russia is planning to breach the contract signed in 2008 with Armenia on concession management of Armenian railways. Afterwards, the information was confirmed by the Russian Ministry of Transport, reported aysor.am.
In August 2018 law enforcers searched the company’s office, suspecting it of tax evasion totalling to 19,000 USD. That time Armenia’s Prime Minister Nikol Pashinyan said “some legal processes are taking place over the company” but urged not to “make tragedy of it.”
But events developed in a negative manner. Already at the end of December, the Republic's Investigative Committee reported that they were investigating the activities of the South Caucasian Railway (SCR), the Armenian company which received the concessions, over 10 years, checking the effectiveness of investments of $226.8 million. The company in response openly declared that the investigation was “biased”. They emphasized that in 10 years of SCR operation, the total time of inspections of tax authorities in the company was 3 years.
The RTVI source said overall 7 cases have been instituted against the company combined into one case and that Moscow is discussing the withdrawal from the contract. The media reported that the information has been confirmed by the Russian Ministry of Transport. “Armenia has created a situation where the South Caucasian Company cannot work normally. All the documents of 10 years were seized, ungrounded accusations were forwarded. We argue that the previous audit did not reveal any violations and the arguments that we have implemented all the concession conditions are being ignored,” Russia’s Deputy Transport Minister Vladimir Tokarev told RTVI. He also confirmed that the Russian side is seriously studying the possibility of early contract termination.
On the other hand, sources from Armenia refuted Tokarev’s statement. “The South Caucasian Railway company works in usual regime,” the company’s spokesperson Ruben Grdzelyan told Aysor.am.
On 13 February 2008, the Government of Armenia signed an agreement to transfer 100% of the state-owned Armenian Railways to Russian Railways. According to the agreement, the concession period is 30 years, with a possible extension for another 10 years by mutual agreement of both parties. South Caucasus Railway is among the five largest companies of Armenia, and its performance has a direct impact on the country's economic growth. The company operates on the following links, Yerevan-Batumi, Yerevan-Gyumri, Yerevan-Ararat, Yerevan-Araks and Yerevan-Yeraskh. Except with Georgia, all international railway links between Armenia and its neighbors have been closed since 1993 due to the blockade against the country by Turkey and Azerbaijan due to conflict in Nagorno-Karabakh.
