ADB mission acquainted with state of Water Project implementation in Azerbaijan

Business Materials 15 May 2010 13:58 (UTC +04:00)

Azerbaijan, Baku, May 14 / Trend, I.Khalilova /

Asian Development Bank (AfDB) continued its talks with the Azerbaijani Government on the state of a project to improve water supply and sanitary services in Goychay and Nakhchivan, the Government said.

"Matthew Westfall, head of Asian Development Bank (ADB) Central and Western Department's Urban Services Division has paid two-days visit to Azerbaijan for discussions of the results of tender procedures for the selection of general contractors for construction works in these areas," the source said.

He held meetings in the Cabinet of Ministers, Ministry of Economic Development, JSC Azersu.

The general contractor for the second region - Nakhchivan - has been already defined, and it will be announced next week after agreeing his candidacy with the Asian Development Bank. However, there are delays due to tender process to identify a contractor to restore the water supply and sanitation services in Goychay. ADB, together with the Azerbaijani side have identified ways of solving problems for the further advancement of the project.

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.

ADB approved second tranche worth $350 million to cover the expansion of the coverage zone to four other cities - Agdash, Agjabadi, Beylagan and Balaken.The third tranche is expected in the amount of $175 million and will create centralized water supply and sewerage systems around Baku.

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 in the sphere of water supply and sewage system.

The total cost of the MFF was approved in the amount of $600 million by the ADB Board of Directors in Azerbaijan in September.

AICO Consulting / European Consultants Organization is Azersu's consultant in this project.