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ADB, Azerbaijan hold official talks on multi-tranche financing to restore water supply and sewerage systems in Azerbaijan

Business Materials 17 August 2009 19:02 (UTC +04:00)

Azerbaijan, Baku, August 17 / Trend I. Khalilova /

The Asian Development Bank (ADB) and the Azerbaijani government completed official talks on multi-tranche financing in amount of up to $600 million to restore water supply and sewerage systems in Azerbaijan and loan agreement on the first project, Bank's Baku representation said on August 17.   

The talks were successful, which enable to submit the first line of MFF to the ADB directors' board on Sep.24.

The first tranche of MFF in amount of $75 million is envisaged for partial payment of project to improve water supply system and sanitary services in Agdash, Goychay and Nakhchivan and the government will own $25 million of the participation shares. Under the loan agreement, the ADB provides project with ordinary loans for 24 years with grace period of four years, at an annual rate of libor +0.2 percent.

"More funds are necessary for full payment of the project. Further expenses can be paid off as soon as it is realized at the expense of MFF," the representation said.

The first trenche of MFF in amount of $75 million is envisaged for partial payment of project to improve water supply system and sanitary services in Agdash, Goychay and Nakhchivan

The second tranche is expected to cover expansion of coverage zone of this project for other three cities - Agjabadi, Beylagan and Balaken.

The third trench is envisaged to allocate for creation of centralized water supply and sewerage systems around Baku.

Current design of the first draft (to improve water supply system and sanitary services in Agdash, Goychay and Nakchivan) was prepared in 2004. But prices for construction materials rather increased, especially there is increase of expenses for sewage system during this period. Installation of modern facilities in sewage system of regions covered by the project, proposed by Azerbaijan, also affects its cost. Moreover, ADB project envisages complete restoration of water supply and sewerage systems in selected regions.

Initial cost of the project hit $39.9 million. First, ADB allocated loan to the amount of $30 million to finance the project but $9.9 million fell on the government.

AICO Consulting Ltd/European Consultans Organization is consultant of Azersu JSC. Consultant prepared report on detailed operations envisaged within project for three years.  

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