ADB sets date of approval of second tranche on project to improve water supply systems in Azerbaijani regions

Business Materials 4 March 2010 10:09 (UTC +04:00)

Azerbaijan, Baku, March 3 / Trend N.Ismayilova /  

The Asian Development Bank (ADB) Board of Directors's meeting for approval of the second tranche of multi tranche funding (MFF) to Azerbaijan for a project to improve water supply and sanitation services in Agdash, Agdjabedi, Beylagan and Balaken scheduled for April 25, the bank reported.

"The estimated annual value of the second tranche is $350 million, and the third tranche of the ADB is expected to reach $175 million dollars, the source added.

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 and Azerbaijani government signed a loan agreement on the first tranche of $75 million as part of MFF to implement a project to improve water supply and sewage services in Goychay and Nakhchivan Dec.17, 2009. 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 finance the work in these two regions, the list of regions covered by the project may expand under following tranches of larger sums.

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. The project was approved five years ago and designed in 2004. Prices on construction materials, especially sewage materials, significantly increased over this period. The construction of 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 is also establishing a foundation for an eight-year partnership between the ADB and the state, allowing for phased investments, and is backed by a clear reform strategy and program. The investment program will improve the quality and use of water and its cleaning for approximately 500,000 people in secondary cities and suburban districts of Baku.

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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