ADB Negotiating its Financing of Azerbaijan’s Railway Economy

Business Materials 9 August 2008 14:12 (UTC +04:00)

Azerbaijan, Baku, 9 August / Trend corr. I.Khalilova / Asian Development Bank (ADB) and the Azerbaijani Government commenced the first discussions of ADB's opportunity to participate in improvement of country's railway infrastructure, ADB's Baku Office said on 8 August. The talks are being held within the Baku visit of Doong So Pyo, the ADB's curator on transport projects in Azerbaijan.

"A final decision has not yet been made, because the state program has not been adopted, but we are holding efficient talks," the Baku Office said.

The ADB is going to allocate $550mln for improvement of railway infrastructure. The funds will be allocated within the multitranche mechanism, which envisages concentration of several railway projects in one package. The State program costs AZN 1.252bln.

The ADB activated discussion in this direction, because the bank is in the list of financial organizations which resources may be involved in financing of railway projects. The list also includes the World Bank (WB), the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB). The first agreement was reached with the WB on allocation of up to $450mln.

The ADB expressed its readiness to soften terms of financing on non-concession loans from libor+0.6% to libor+0.2%. Loan resources with new terms are offered exactly on the railway project. They can be issued for 25-year term with 8 years of grace period. Besides interests on loaning, ADB offers to reduce commission charges for service from 0.35% to 0.25%. Probably, the ADB will finance implementation of the second stage of improvement of country's railway infrastructure, which includes purchase of new rolling stock, engines and increasing the speed of rolling stock lines.

The Government has been cooperating with ADB since 1999 and the bank has allotted $304mln to the country under the state guarantee.

On 8 August, the official exchange rate totalled 0.8109 AZN/USD.

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