Finance Ministry and BNP Paribas Coordinate Terms of Loan Under Road Project

Business Materials 25 October 2007 19:32 (UTC +04:00)

Azerbaijan, Baku / corr Trend I.Khalilova / The Azerbaijani Finance Ministry and French bank BNP Paribas agreed upon term of financing the project on reconstruction of a highway from Shamakhi to Zakatala and the bank is prepared to allocate $320mln for it, the Government said on 25 October.

BNP Paribas agreed upon simplifying the terms of the loan. In accordance with the agreement, the loan will be allotted at libor + rate up to 1% for the term of 12 years with 4-year grace period.

"Generally, Azerbaijan's policy targtets attracting loan at rate not exceeding libor + 1," the Government said.

BNP Paribas offers financing the reconstruction of the highway section till Zakatala District (Shemakha-Imsayilli-Gabala-Sheki-Gakh-Zakatal-Balakhani) under the guarantee by the Israeli insurance corporation ASHRA.

A draft credit agreement is under the consideration of the Cabinet of Ministers, which will take a final decision after receiving visas for economic administrations.

The French bank stated its readiness to allocate a $400mln loan for a project to expand the highway from Hajigabul to the Georgian border from a two lane to four lane road. The loan for the first project is allocated under the guarantee of the Japanese Bank for International Cooperation (JBIC) and the Japanese insurance agency Nexy.

"As the Government is clarifying the its priorities, the final decision of the approval of the loan has not been adopted yet," the same source said. The term of the loan are still to be coordinated.

The Finance Ministry of Azerbaijan insists on decreasing the rates for the credit from libor+0.75% to 0.75% per year. The bank stated its readiness to allocate $400mln credit for a period of 20 years with a 4 or 5 year grace period.