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GERMAN-FRENCH LOAN FOR AZERI ENERGY PRODUCER

Oil&Gas Materials 30 June 2005 13:53 (UTC +04:00)

Azerenerji, Azerbaijan’s principal electricity producing and transmitting company, yesterday (June 29) signed a loan agreement with Germany’s Bayerische Landesbank on drawing 300 million euros to the project on the construction of a combined-cycle plant in the city of Sumgayit.
An Azerenerji source told Trend that the cost of the project also includes the laying of a new gas line to keep the facility running at an operating capacity of 506 MWt.

Germany’s Siemens has undertaken duties to commission the plant on a turnkey contract basis, following the signing of a EUR257-million contract in May 2005. In accordance with the terms of the contract, the plant will be commissioned in 26 to 28 months after the start of the project, with Azerbaijani companies to
be involved in the corresponding building and assembly jobs. The facility likely will start to operate in 2007, and employ the equipment produced at Siemens’ works in Europe.

The loan has been provided by a bank syndicate, involving Bayerische Landesbank as the principal lender and two French banks, BNP Paribas and Societe Generale. The borrowing is to be recovered within 15 years, and bears an annual interest rate of LIBOR + 0.55 percent, with a three-year grace period on principal payments. The amount of the loan has been equally shared among the lending institutions.

In the past, there were two thermoelectric power stations in Sumgayit. However, in 2001 Azerenerji management decided to suspend their operation due to unacceptably high rate of fuel consumption, reaching up to 800 grams of equivalent fuel per kWt/h of electricity, against the internationally accepted standards in the range of 60-100 grams of equivalent fuel per kWt/h of electricity.

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