The State Oil Fund of Azerbaijan will reduce the financing of Baku-Tbilisi-Kars railway construction project from AZN 80m to AZN 30m as part of a state credit. Azerbaijani President Ilham Aliyev signed a decree on budget restructuring October 7. The funds will be allocated to internal projects, Azerbaijani President’s website reported. The expenses on improving the social conditions of refugees and internally displaced people will be increased from AZN 80m to 90m.

The decision aroused a kickback by local experts. Thus, commenting on the President’s decision, the Chairman of Center for Social and Economic Development Vugar Bayramov told Echo (Russian-language daily) that the fact indicates that Azerbaijan is not so interested in developing the initiative.

According to him, the project’s financing probably was reduced in the context of Armenia-Turkey reconciliation. Simultaneously, according to some statements, the budget of the State Oil Fund can be cut next year. “Under the 2010 state budget, the oil price is to total U.S. $45/per barrel, which is indicative of an expected reduction in oil revenues in 2010.” Thus, the reduction in oil revenues is inevitable.

Baku-Tbilisi-Kars railway transport corridor involves the construction of 98-km Kars- Akhalkalaki railway, with 68 km in Turkish and 30 km Georgian territory. The reconstruction of Akhalkalaki-Tbilisi section is also required. The preliminary estimate of the project is U.S. $ 422m with U.S. $ 202m for the Georgian part and U.S. $ 220 for Turkish one. The project is aimed at communication bypass of Armenia.