Home / Economy / State Budget to Spend 50 million GEL on Passenger Transportation by Railway

State Budget to Spend 50 million GEL on Passenger Transportation by Railway

Parliament of Georgia plans to discuss a bill of amendments to Georgian Railway Code, under which passenger traffic will be funded from the state budget.

Akaki Saghirashvili, deputy Minister of Economy and Sustainable Development, told BM.Ge that passenger traffic is unprofitable direction for Georgian Railway and, according to instruction N1379 of EU association agreement, it must be financed by the Government.

“In EU countries passenger traffic is subsidized. This direction is not business-oriented and it cannot cover all costs. This is the state interest and therefore, this direction must be financed from the state budget”, the Deputy Minister noted.

As to the funding scheme, the Ministry of Economy is to sign an agreement with the traffic operator. At this stage, Georgian Railway will be this operator, Akaki Saghirashvili said.

“The agreement will be concluded with the one and only operator – Georgian Railway. After introduction of European legislation in our space and after private operator appears on the market, ordinary tenders will be announced and the winner companies will carry out the passenger traffic”, he said.

The EU instructions must be enforced in Georgian Railway system until 2022. Starting 2019 the Government will fund the passenger traffic by 15 million GEL.

“Budget subsidies will be applied starting 2019, for only direct expenditures. After introduction of the 34th instruction, the railway infrastructure will be separated from the operator and the government will have to compensate the price for admitting to the infrastructure and therefore, this amount will considerably increase. We expect this amount to reach 50 million GEL in 2022”, the Deputy Minister said and added that the compensation calculation method was developed jointly with foreign experts.