WB and Azerbaijan to Launch Negotiations on Railway Project

Business Materials 21 January 2008 17:40 (UTC +04:00)

Azerbaijan, Baku, 21 January / Trend corr. I. Khalilova / The Azerbaijani Government plans to hold official negotiations with the World Bank (WB) on the project to assist in railway transit and trade in Azerbaijan in the sum of $673.8mln by 28 January, the Azerbaijani Cabinet reported.

The World Bank (WB) confirmed its readiness to allocate $450mln for the development of the railway infrastructure of Azerbaijan. Financing the project will be implemented through credit resources of the International Bank for Reconstruction and Development, which does not limit its loan to be allocated for 20 years with a 4 years grace period.

The credit funds will be partially ($235mln) paid off from the public budget, and $215mln from the funds of the Azerbaijani State Railway.

A total of 90% of the funds will be spent to develop the railway infrastructure in Azerbaijan, and 10% for internal and international trade.

The project includes three components. These are the rehabilitation of the railway economy, namely, the railway section ranging from Baku to the Georgian border, the transition from 3.3 KW-permanent current to 25 KW-changeable current and the replacement of the signal system in connection with its transition to the electricity supply system.

Within the framework of the second component it is planned to acquire 50 electric locomotives and the thirdly to upgrade and adjust the activities of the Azerbaijan State Railway to the requirements of the market economy. The Government is considering the reformation of this organization into a joint-stock company.

Through the WB grant, the consultants from Pabeco/Feneka/Sulaco consortium finalised the marketing plan.

The 4-year project is implemented under the State Program on railway infrastructure development in Azerbaijan (2007-2012), with the total budget of AZN 1,252bln.