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Asian Development Bank Repeatedly Appeals to Azerbaijan Government to Finance Railway Projects

Business Materials 27 June 2008 19:09 (UTC +04:00)

Azerbaijan, Baku, 27 June /corr. Trend I.Khalilova / Asian Development Bank (ADB) repeatedly appealed to the Government of Azerbaijan to include it in the list of the financial institutes, whose funds will be involved in financing the measures to improve railway infrastructure, a source at ADB Representation in Baku said. In addition to financing, the bank is prepared to provide technical assistance in developing the projects. For the first time, the bank officially appealed to the Government in January 2008, with a proposal to allocate $550mln.

These funds can be allocated within the mechanism Of Multitranche Financing Facility (MFF), which envisages concentration of several projects in one pack. Asian Bank for the first time used this mechanism for financing road projects, for which $500mln was allocated [today one project totaling $200mln was approved.

The representation is not sure that the ADB will be proposed projects with regards to railway facilities and management at the total amount because many institutions wish it. The cost of State Railway Infrastructure Improvement Program is estimated at AZN 1.252bln. Because of the delays with approval of the State Program, the bank postponed visit of the transport mission to the end of July to discuss directions, where ADB funds can be attracted.

In its proposals, ADB expressed readiness even to soften financing conditions from libor+0,6% to libor+0,2%. Credit resources on the new conditions are proposed concretely for the railway project. They can be provided for a period of 25 years, with period of grace of eight years. in addition, Asian Bank proposes to decrease commission for the service (from 0.35% to 0.25%).

The Government considers that the ADB funds can be proposed to the realization of the second stage of improvement of railway infrastructure in the country - acquisition of new trains, locomotives, increase in the speed of line trains, but the bank has not received an official agreement for the participation.

The government has been co-operating with the ADB since 1999, and up to now, the bank allocated for the country $304mln credit under state guarantee, including $200mln for the reconstruction of roads. Official rate on 27 June is 0.8128 AZN/USD.

The correspondent can be contacted at: [email protected]

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