Azerbaijan, Baku, May 18 / Trend /
The German Development Bank KfW is negotiating with the Azerbaijani government to continue project on restoring water supply and sewerage system in Shakia and Ganja, the government said.
"Extra funds will be allocated to cover regions fully and to install modern cleaning devices for sewerage system," the government said.
Overall, the project will improve the quality and reliability of the water supply and sewerage system in Ganja and Sheki. The budget of the first phase of the project is 55 million euros. Under the agreements, signed in Bern in October 2006, KfW will allot a 37-million-euro loan and Seco - a 10-million-euro grant. Azerbaijani Government's share in the project is eight million euro.
According to a feasibility study for the entire project and preliminary calculations, 80-100 million euros are required. The remaining funds are expected to be allocated by operators of networks, which are expected to be drawn in for the fourth year (last year of the construction work) of the first phase of the project.
Operators will be selected by tender for both networks. The tender will opened jointly by KfW and Azerbaijani government. Network will be transferred to management on condition of significant investments by investors to complete reconstruction of water supply systems of the cities. At the suggestion of the bank, the network will be transferred to management at least forfour years.
The government does not rule out that, unlike the first phase of the project, for which a German bank provided loans on privileged terms (a term of 40 years with a grace period of 10 years and the interest rate at 0.75 per cent per year), KfW will provide funding for semi-commercial conditions (for a period of 15-20 years) for the second phase. [The bank has already financed energy project for a period of 12 years with grace period of two years under commercial terms.]
Bank's consultant to the for the first phase of the project is a Swiss consulting company Colenco which is also tasked with institutional improvement of Gandja and Shaki water system. The measures to improve the structure of water system and construction work will be conducted at the same time.
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