Updated August 22, 2008

Republic of Kalmykia's government has established the company JSC “Manychskiy Ship Canal” that will be engaged in the preliminary researches for realization of the project on the canal construction between the Caspian and Azov Seas

.

As suppose in Kalmykia's Presidential Administration, the company foundation is the next step to the implementation of the combined idea of Kalmykia and Stavropol's authorities about the construction of the new transport corridor “Eurasia”, like Volga-Don Ship Canal.

According to the plan of Elista and Stavropol's developers, the canal will have such route: the Caspian Sea – Kuma river – Vostochny Manych – Zapadny Manych – the Azov Sea. The marine and river transport, as well as river-sea ships, with the deadweight to 8 000 tons are supposed to run the canal. As per the preliminary project, the canal numbers 6 gates, and its length, depending on the construction version, can reach from 675 to 850 km. The cargo transit capacity is 45 million tons per year. The expected price is RUR 15 billion.

The realization terms are 6-8 years.

The authorities of Kalmykia, Stavropol and Kazakhstan that intends to transport its oil through this canal back the project.

According to the data of Kalmykia's Ministry of Economic Development, JSC Manychskiy Ship Canal's authorized capital totals RUR 36,16 million, and its 100% stocks are republic-owned.

Manychskiy Ship Canal comprises the already operating Manychskiy waterway within the downstream of Manych, Veselovskoe and Proletarskoe water reservoirs, Manych-Gudilo lakes, and it can run through Kalmykia's underpopulated steppes and be linked to the Caspian Sea.

Kalmykia's authorities are planning to provide the canal with water by means of its transference from the riverheads of Kuban, Kuma, Kalaus, as well as from Volga estuary after the construction of Volga-Chogray canal will be finished. “This project can provide the Stavropol Territory, as well as the South of Russia, with the social and economic development.

It will open new opportunities in the foreign trade and in the international tourism of the Southern District of Russia.

Its implementation is a possibility to provide people with the working places in several regions of the Territory and in the nearby areas”, as in the Stavropol Territory's Ministry of Economic Development declared.

In its turn, the authorities of

the Rostov and Volgograd regions are lobbying another project – the construction of the second part of Volga-Don Ship Canal with more than 1 000 km length that will cross the territory of these two subjects of the Russian Federation. The construction of this project can reach RUR 60 billion, as it is assumed. The implementation terms are 5-7 years. The height differences within the expected route reach 88 meters, therefore the builders will have to erect 18 gates.

Nevertheless, Azerbaijan and the authorities of Russia's Ministry of Transport back this project.

However, none of the projects is chosen at

the federal level yet.

Moreover, the decision is postponed sine die. According to the statement of Kalmykia's prime minister Vladimir Sengleev, the Republic's authorities “have only joined the initiative of Stavropol's authorities which have already ordered the version of Eurasia construction to LenmorNIIproekt”. In its turn, at the beginning of the year Kalmykia's government signed the protocol of intent with the group of the Indian businessmen about the establishment of the combined engineering center in Elista for development of the project on this channel construction, thus taking the first step to its realization.

When the federal center paused, Kalmykia took the second step and incorporated JSC Manychskiy Ship Canal as the part of Eurasia project.

As in the Republic's government explained, its establishment is targeted at the “pre-investment research of the market situation for the preparation and designing of Manychskiy Ship Canal”. The decision taking about the practicality of one or another version will depend on the already continued project and its economic feasibility, as the press secretary of Kalmykia' s pre

sident stated.

Herein the Indian specialists that have huge experience of large-scale construction can help, and at this stage, they will render the technical support to the Russian colleagues. Moreover, the Indian party is ready to attract its investors to the project implementation, and the experienced

Indian construction companies – to the contract works.

Currently, oil from the Caspian region is transported by means of the railway through Georgia and Russia's territories to the seaports and than through

the Black Sea. When the construction of this canal will be finished, larger volumes of oil from the Caspian Sea will be transported quicker and directly to the Black Sea. So, the canal has the huge economic potential.