Azerbaijan, Baku, Dec.16 / Trend , I.Khalilova /
The Asian Development Bank (ADB) and Azerbaijani government will sign a loan agreement on the first tranche of $75 million as part of a multi-tranche financing facility (MFF) to implement a project to improve water supply and sewage services in Goychay and Nakhchivan, the ADB Baku Office said today. The total cost of the MFF was approved in the amount of $600 million by the ADB Board of Directors in Azerbaijan in September.
ADB Director for Urban Economy Matthew Westfall is in Baku to sign the agreement.
The first tranche worth $75 million under the MFF has already been approved. The funds are designed to finance work in two regions, although plans previously anticipated three regions. As these funds, including the government's share of $25 million, are sufficient to fully the work in the two regions, the list of regions covered by the project may expand under following tranches of larger sums, the ADB Baku Office said.
Under the loan agreement, the ADB's first tranche loan of $75 million is allocated for a 24-year term with a four-year grace period and interest set according to its LIBOR-based lending facility.
The first tranche will cover additional costs in connection with the rising costs of the project to improve water supply and sewage services in Agdash, Goychay and Nakhchivan, which was approved five years ago. The project was designed in 2004. Prices on construction materials, especially sewage materials, significantly increased during this period. The construction of the modern sewerage system facilities covered by the project also affects its value. The ADB project also provides for the complete restoration of water supply and sewage services in the selected regions.
The project's initial cost hit $39.9 million. The ADB first allocated a loan amounting to $30 million to finance the project, but $9.9 million fell to the government's share.
The MFF establishes a foundation for an eight-year partnership between the ADB and the state, allows for phased investments, and is backed by a clear strategy and program of reforms.
The second tranche is expected to cover the expansion of the coverage zone to four other cities - Agdash, Agjabadi, Beylagan and Balaken.
The third tranche will create centralized water supply and sewerage systems around Baku.
AICO Consulting / European Consultants Organization is Azersu's consultant in this project.
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