ADB Renders Technical Support to Azerbaijan to Develop Railway Projects

Business Materials 19 November 2008 12:18 (UTC +04:00)

Azerbaijan, Baku, 19 November / Trend , corr. I.Khalilova /The Asian Development Bank (ADB) allocated grant in the amount of $1mln for Azerbaijan to develop projects within the State railway infrastructure improvement program, a source from ADB Baku representative reported.

"We are ready to consider all versions, but the project which is designed within the ADB technical assistance, will be defined after affirmation of the program," the source said.

At present, consultants are selected to design the project, which is planned to complete until the end of 2008.

The ADB allocated up to $550mln under Multitranche package to finance projects depending on the country's need. The ADB has held preliminary talks with the Azerbaijan government over the allocation of $500mln 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 [presently one project totaling $255.4mln was approved].

The State Railway Infrastructure Improvement Program is estimated at AZN 1.252bln.

In its proposals, ADB expressed readiness even to soften financing conditions from libor+0.6% to libor+0.2%. Loan 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%).

At present the Government is considering investors for the reconstruction of railways in the direction of Russia-Baku Iranian border (North-South transport corridor). Along with the ADB and the European Bank for Reconstruction and Development (EBRD) will also join the financing this work. The EBRD, which acts jointly with the European Investment Bank, is prepared to allocate $500mlnThe German bank for development KfW is prepared to finance the renewal of trains of the Azerbaijani State Railway (ASR) and the Japanese Bank for International Cooperation ї the electrification of the ASR.

The railway segment of the West-East corridor is finance by the World Bank which has allotted $450mln.

The correspondent can be contacted at: [email protected]