ADB’s Water Project in Azerbaijan Became More Expensive

Business Materials 29 February 2008 20:00 (UTC +04:00)

Azerbaijan, Baku, 29 February /corr. Trend I.Khalilova / The Asian Development Bank (ADB) jointly with Azerbaijan's Azersu JSC, prepared plan of measures for the project Improvement of Water Supply and Sanitary Services in Agdash, Goychay and Nakhchivan, the Baku Office of ADB said.

The measures were prepared during the visit of Bank's chief specialist, Shakil Khan, to Baku- who came to make clear the reasons of delay of project's realization. In addition, it was made clear that the project became more expensive, by nearly $5mln, in the past three years.

However, the closing budget of the project will become clear after the consultant will prepare the report on details of the work. The current design of the project was devised in 2004, but since then, the prices significantly increased for the construction materials.

AICO Consulting Ltd/European Consultans Organization was attracted to assess the project. The Government considers that any price increase in the project will be covered at the expense of government's share.

The initial cost of the project is $39.9mln. To finance the project, the ADB allocated $30mln, whilst $9.9mln falls on the Government. For the duration of the project, which is to be completed by 2010, reforms are to be carried out for the development of the water supply system and infrastructure in Agdash, Goychay and Nakhchivan.

Currently, a tender has been announced to involve a sub-contractor for the construction works. The institutional reforms are carried out with the assistance of Castaliya, a New Zealand company, and AzSpetsPromInvest Consulting Engineers (ASPI) of Azerbaijan. The consortium launched its services in March 2006. The contract was signed for 18 months and the cost of services is estimated to be $500,000.

Azersu, a State water company, has fulfilled the demand of the Asian Development Bank (ADB) to reform the structure of the water networks in the Agdash and Goychay Districts of Azerbaijan. The process of their reformation into a regional joint stock company is complete. The local executive bodies were satisfied with their management, saying they possess the necessary authorities of the elected and the appointed. In compliance with ADB's terms, the municipalities are participating in the Council of Directors of the joint stock companies that are involved in the water supply.

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