Azerbaijan, Baku, Oct. 12 / Trend , N.Ismayilova/
The European Bank for Reconstruction and Development (EBRD) is providing a €120 million loan to Garadagh Cement, the leading cement producer in Azerbaijan, to support the company's drive to improve energy efficiency and expand production, said Paul-Henri Forestier, EBRD Director for Caucasus, Moldova and Belarus.
"Given the global economic crisis, the EBRD Board of Directors decided to finance part of the cost of the project at its own expense, and if the financial environment in the global economy improves, we may consider providing additional funding," said Forestier.
He said the remainder of the cost of the project will be financed through a subordinated loan from a founder company - Holcim and via own profits of the plant.
"A loan will be granted to Garadagh Cement through two tranches for five and six years," said Forestier.
Earlier, it was reported that the project will be financed through the main credit (credit A / B) worth €150 million, approximately 50 percent of which will be offered to commercial banks (lenders Class B), and the rest - financed by the EBRD. Another €20 million had to come from a subordinated loan of Eurobank (Class C), and an additional €30 million subordinated loan -provided by the founder - Holcim.
As part of the modernization and expansion of Garadagh Cement, it is planned to increase production of clinker from 2,616 to 4,000 tons per day and annual cement production from 1.3 million tons to 1.7 million tons without imports. Funding will cover a construction period from mid 2009 to the first half of 2011, when a new furnace is planned to be launched. As a result of the project, the plant's overall emissions of carbonic dioxide must be reduced by 10 percent.
The project is expected to achieve substantial energy savings by more than 50 per cent reduction in energy consumption per unit of clinker production. The introduction of the modern technology will provide an opportunity to transmit and mass increase skills. The EBRD loan will support the company, leading in terms of corporate governance and business management under difficult conditions. The project, the largest foreign direct investment outside the oil and energy sector of Azerbaijan, should have a positive effect for other potential investors from the private sector. It aims to attract co-financing commercial banks in amounts and maturities not achievable outside the oil sector in Azerbaijan.
EBRD's investments will increase the capacity of Garadagh cement plant to 1.7 million tons from the current 1.3 million per year, as well as reduce the energy used to produce one ton of cement.
Partners of JSC Garadagh Cement is a Swiss Holcim (69.4 percent), EBRD and Azerbaijan Investment Company (10 percent), private shareholders (10.6 percent).
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