YEREVAN, September 2. /ARKA/. The question of the future management of Armenia's railways has gradually transformed from a technical dispute into one of the notable points on the Armenian-Russian economic agenda.
Yerevan claims that the current concession model may hinder the country's integration into new international transport routes, while Moscow emphasizes the scale of investments already made and its intention to fulfill the existing contract. Against this backdrop, Armenian Prime Minister Nikol Pashinyan proposed to consider transferring the 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 gathered seven key facts that help to understand what is happening around the South Caucasus Railway.
Fact 1. Armenia's 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 management of the railway infrastructure is carried out by South Caucasus Railway, a 100% subsidiary of Russian Railways. The concession management period is 30 years, until 2038, with the possibility of extending it for another 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 discussion began in February 2026. Pashinyan stated that Russian management of the Armenian railway is becoming a problem for the country in terms of the competitiveness of transport routes under current international conditions. In August, Pashinyan specified this position, stating that sanctions against Russia compel international investors, freight carriers, and trade participants to view working with infrastructure under Russian management as a risk and to choose alternative routes.
This issue is particularly acute against the backdrop of new transport projects in the region and plans to connect Armenia to the international railway network. The approved program of the Armenian government for 2026-2031 already explicitly provides for a review of the railway management system so that it does not hinder the country's integration into the international transport system. At the same time, Yerevan has repeatedly emphasized that it prefers to negotiate with Moscow rather than unilaterally terminate the agreement.
Fact 3. Russia claims over 30 billion rubles in investments
The Russian side claims that since the beginning of the concession, the volume of investments in Armenia's railway system has exceeded 30 billion rubles. This figure was cited by Russian officials in 2026. The head of Russian Railways, Oleg Belozerov, also stated that investments from Russian Railways and the revenues of the South Caucasus Railway from 2008 to 2025 amounted to about $396 million. The Russian side emphasizes that dividends to shareholders have not been paid, and profits have been directed towards the development of the railway. Therefore, Moscow states that in the event of a change or termination of the concession agreement, the issue of returning the investments made should be taken into account in the calculations between the parties.
Fact 4. $2 billion is not the cost of the concession
Another figure that has emerged in the discussion is around $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 present financial claims for something it had not demanded for decades. In this context, the Prime Minister mentioned an amount of about $2 billion annually. However, this was not about an already submitted bill to Russia, nor an established compensation amount, nor the cost of the concession itself. It was about a hypothetical possible payment of around $2 billion a year. Pashinyan mentioned this during the same briefing where he allowed the possibility of going to arbitration, but did not present this amount as a calculated claim or a future lawsuit. The Russian side called the idea of additional payments unfounded and pointed out its right to demand compensation for investments made in the event of a unilateral change in the terms of the contract.
Fact 5. Pashinyan estimated the possible price of transferring the concession rights at about $400 million
On August 24, Pashinyan mentioned a different figure. According to his assessment, there is currently an opportunity to sell the rights to manage the Armenian railway concession 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, the range discussed is about $350-400 million, but there is no written proposal from the investor to purchase the concession for $400 million yet. Thus, $400 million should be viewed not as an agreed price for the deal, but as a discussed benchmark for the potential value of the concession management rights.
Fact 6. Pashinyan mentioned Kazakhstan, the UAE, and Qatar as possible options for a third party
Back in February, Pashinyan proposed a model where the concession management rights could be acquired by a third country that maintains good relations with both Armenia and Russia. As examples, the Prime Minister mentioned Kazakhstan, the United Arab Emirates, and Qatar. However, these countries should not be considered official bidders for the concession. Pashinyan cited them as examples of states that could theoretically meet the proposed formula. There are currently no publicly confirmed agreements regarding the purchase of the concession rights by any of these countries.
Fact 7. Putin suggested continuing discussions about the railway in Moscow
The railway issue is now moving to a new level of Armenian-Russian dialogue. After meeting with Pashinyan at the SCO summit in Bishkek, Putin announced that he 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 investments in infrastructure. Putin linked the prospects for new investments primarily to the volumes of future transportation, 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 negotiations will specifically address the sale of the concession or that the parties have already agreed on the mechanism for its transfer. Thus, as of today, the discussion is not about a ready-made solution for the South Caucasus Railway, but about negotiations around a new model: Yerevan wants to eliminate risks that hinder Armenia's integration into international transport routes, while Moscow wants to preserve economic interests and take into account previously made investments. Therefore, the railway and its further development have already been named by the Russian side among the specific issues that Moscow offers to discuss with Yerevan.
