Azerbaijan, French Bank to Sign Loan Agreement on Road Project

Business Materials 25 February 2008 17:47 (UTC +04:00)

Azerbaijan, Baku, 25 February / corr Trend I.Khalilova / The Azerbaijani Government and the French bank BNP Paribas concluded talks on projects to widen the highway from Hajigabul to the Georgian border from a two-lane to a four-lane highway and to finance the reconstruction of the highway from Shamakhi District to Zakatala District of Azerbaijan, the Transport Ministry said on 25 February.

The length of the first section is 156km and the section 164km.

"Currently the draft decree on authorization for signing the loan agreement is underway," the Ministry said.

The Azerbaijani Finance Ministry and French bank BNP Paribas agreed upon the financing terms of the project to reconstruct a highway from Shamakhi to Zakatala and the bank is prepared to allocate $320mln. In accordance with the agreement, the loan will be allotted at libor + rate up to 1% for the term of 14 years with a 4-year grace period.

During the talks Azerbaijan refused the commercial part of the French bank's loan.

The Transport Ministry said that talks with BNP Paribas on the second loan to expand the highway from Hajigabul to the Georgian border from a two-lane to four-lane road are underway.

The bank stated its keenness to present $400mln though the Japanese Bank for International Cooperation and the Japanese insurance agency Nexy. The loan is allocated for twenty years with a four-year grace period and LIBOR of +0.75% rates. The insurance services for the loan will be provided by ASHRA. Nexy is expected guarantee the loan under the rate of libor+0.75% for the term of 20 years with 4-5 year grace period.