Asian Development Bank Expect Road Project to Take Effect in February

Business Materials 1 February 2008 20:25 (UTC +04:00)

Azerbaijan, Baku, 1 February / Trend corr. I.Khalilova / The Baku representative of Asian Development Bank expects that the credit agreement on re-construction of part of the Masalli-Astara road project with $200mln to take effect in the mid of February. The contract was signed in Baku on 15 January.

The preliminary plan of the project was agreed with Asian Bank.

The Government said that the land will be purchased at the expense of the budget funds and AZN 30-35mln will be allocated in this respect. The amount of the necessary funds will be defined after the adoption of the plan which should be intensified due to price hikes as well, the bank said. The construction work can commence mainly after the purchase of land.

"The development of the project, as well as the completion of measures to purchase land requires two years to complete. Thus, by the end of 2008 it will be possible to launch construction work in case the process is intensified," the Baku office of the bank said. The road has been divided into three parts and the first 23km section will be reconstructed by 2010-2011.

The ADB credit resources will be partially ($190mln) granted from the general resources of the bank (the period of the credit is twenty-four years with a four-year lax period, and under the interest rate of libor+1% per annum), and $20mln - lax (the period of the credit is thirty-two years with an eight-year lax period, and under the interest rate at 1% during the lax period, and 1.5% - during the remaining period). The lax part of the credit is considered for the reconstruction of rural roads linking the highways

The credit on Masalli-Astara road project was allocated within the Multitranche Financing Facility (MFF) line with cost of $500mln envisaged for construction of three road projects. Today, only one project has been agreed. MFF stipulated the time to 2014 for use of other part of allocated funds.