Azerbaijan Signs Final Protocol on Negotiations with WB of Railway Project

Business Materials 12 February 2008 13:13 (UTC +04:00)

Azerbaijan, Baku, 12 February / Trend corr. I.Khalilova / The World Bank and Azerbaijan have specified credit conditions within the project to assist in the transit of railway and trade at a total cost of $673,8mln. The World Bank (WB) confirmed its readiness to allocate $450mln for the implementation of the railway infrastructure project in Azerbaijan for 17 years with a 4-year grace period on libor+0.05%

Unlike previous years, work and services carried out at the expense of international credits will be imposed by GDP with 18% in compliance with the change made in the Tax Code.

The Baku representatives of the Bank stated that negotiations which began between Azerbaijan and the WB on 29 January completed as the final protocol was signed by Artur Rasizadeh, Prime Minister of Azerbaijan. The credit will be approved by Council of Directors of the bank.

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 a 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 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.

The 4-year project is implemented under the State Program on railway infrastructure development in Azerbaijan

The correspondent can be contacted at: [email protected]