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Cablegate: Turkmenistan's Underdeveloped Transport Sector

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P 221132Z JAN 10
FM AMEMBASSY ASHGABAT
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INFO RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUCNCIS/CIS COLLECTIVE
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UNCLAS SECTION 01 OF 02 ASHGABAT 000106

SENSITIVE

SIPDIS

STATE FOR SCA/CEN; EEB; NEA/IR
COMMERCE FOR DSTARKS/EHOUSE

E.O. 12958: N/A
TAGS: ECON ETRD EAIR ELTN EWWT EINV BTIO IR TX
SUBJECT: TURKMENISTAN'S UNDERDEVELOPED TRANSPORT SECTOR

ASHGABAT 00000106 001.2 OF 002


1. (U) Sensitive but unclassified. Not for public Internet.

2. (SBU) SUMMARY: Private transportation companies in
Turkmenistan reported gradual growth in 2008-2009 in the
country's trucking, railway and maritime sectors. Despite
this growth, transportation companies acknowledged serious
infrastructure shortcomings in all three transport sectors,
especially in rail and maritime. Industry reps opined that
the commercialization and enhancement of transportation
services is inevitable, given the growing demand to move cargo
to and through Turkmenistan. While the government officially
supports the idea of modernizing the country's transport
sector, it has not, to date, invested the amount necessary to
update its inadequate infrastructure. END SUMMARY.

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CARGO TRUCKS

3. (SBU) Trucking is the primary means of freight transport in
Turkmenistan. The country's cargo truck fleet is
comparatively small, but growing. Private Turkmen transport
companies told us that 45 twenty-ton payload trucks enter
Turkmenistan daily through two of the crossing points on
Turkmen-Iranian border. The majority of these trucks will
return to Iran with international cargo bound for points other
than Iran. Transshipment takes place at either the Iranian
seaport of Bandar Abbas or the Iranian land cargo terminal of
Mersin on Iranian border with Turkey. The number of trucks
bound for the Iranian market is lower. Since there are no
centralized trucking terminals in Turkmenistan, truck drivers
generally pick up shipments at individual vendors. As a
result, it takes 3-5 days for drivers to complete their loads.
Seasonal goods, like cotton exports in the summer and fall,
and fruit and vegetable imports in the fall and winter, also
affect the number of cargo trucks.

4. (SBU) Despite having a Free Transit Trade agreement with
Iran, Turkmenistan in 1998-99 introduced a transit tax on
Iranian and other foreign trucks, reportedly to compensate the
government for their use of Turkmenistan's highways. Iran
reciprocated the move. Truck drivers from both sides pay
about 150 USD for entry and road use permission.

5. (SBU) There are currently around fifty to sixty transport
and expeditor companies in Turkmenistan, the majority of which
are foreign. On paper, the Ministry of Automobile Transport
acts as the expeditor for cargo transport via truck throughout
the territory of Turkmenistan. In practice, private agents
expedite nearly the entire process.

RAIL TRANSPORTATION

6. (SBU) The primary responsibility of the Turkmen Ministry of
Railways is to provide and maintain cars and locomotives.
Private transportation companies handle nearly all other
railway services. A current shortage of diesel locomotives
and cars hinders rail transport growth. A representative of
the Swedish company Trans Eurasia Holding told economic
assistant that Turkmen government views the inadequacies of
the country's railways seriously. The government recently
announced a tender to purchase new railroad boxcars and diesel
locomotives in order to increase cargo capacity through
Turkmenistan to onward destinations.

7. (SBU) The Trans Eurasia Holding rep told us that the
southeastern border crossing with Uzbekistan at Farap receives
around 3,000 rail cars a month (Note: 50 tons is the standard
payload for each car. END NOTE.) He added the Sarahs (Iran-
Turkmenistan border) border crossing receives around 2,000
cars monthly. There is a wheel-change terminal at Sarahs to
adjust Turkmen cars, which use the old Soviet gauge system, to

ASHGABAT 00000106 002.2 OF 002


the Iranian gauge system and vice versa. According to Turkmen
transportation experts, the Turkmen Railway Ministry faces a
problem with the slow return of cars from Iran, and some
Turkmen rail cars reportedly "disappear" once they enter Iran.
The Russian rail network links Turkmenistan and Europe, and
Asian companies with warehouses in Finland reportedly make
faster deliveries through Russia to Central Asia than from
their facilities in northern China. Transportation experts
cite the absence of private railway companies in Turkmenistan
as the primary reason for the lack of infrastructure
improvement and commercial progress.

MARITIME TRANSPORT

8. (SBU) The primary Caspian seaport in Turkmenistan is
Turkmenbashi. In the country's maritime transportation
sector, the major constraints are limited technical
infrastructure and a shortage of vessels. Existing ships, for
example, can only make short trips along the coast; they are
not equipped or maintained to sail across the Caspian to Baku,
Azerbaijan. Turkmen ships regularly sail to the coastal oil
terminals at Cheleken and Ekerem. It is estimated that annual
oil shipments from Turkmenbashi, Ekerem, and Cheleken are
about two million tons. The Azerbaijani-operated ferry
service between Turkmenbashi and Baku allows access for
Turkmen railways to the Georgian seaports of Poti and Batumi.
The ferry delivers around 30,000 tons of railway cargo to
Turkmenistan monthly; many U.S. shipments to Central Asia use
this route. No official data on the volume of maritime
transportation is available, but experts believe it to be
relatively small.

9. (SBU) COMMENT: Given Turkmenistan's geographic location
along natural transport routes through Central Asia and to
points beyond, it has the potential to greatly increase its
role as a regional transport hub. The lack of investment in
transportation infrastructure is the main obstacle to
developing the sector. Privatization of the country's
transportation sectors would be a potentially viable solution,
but only in the long-term given the predominant role of the
state sector in government policy. END COMMENT.

CURRAN

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