ADB approves first private sector infrastructure investment in Azerbaijan
Azerbaijan, Baku, June 3 / Trend /
The Asian Development Bank (ADB) is providing 20 million euro to an integrated cement plant in Azerbaijan to expand output and improve fuel efficiency, the ADB said.
"The loan marks ADB's first ever private-sector infrastructure investment in the Central Asian nation," the bank said.
The loan, approved by ADB's Board of Directors, will help "Garadagh Cement" Open Joint Stock Company raise its cement production capacity by around 30 percent to 1.7 million tons per year. At the same time, the replacement of the existing four wet kilns with a single, more efficient dry kiln will significantly reduce the plant's fuel consumption, cut water consumption and effluent discharge, and bring the plant in line with international environmental standards.
Azerbaijan's economy is one of the fastest growing in the world. Given sustained commercial construction and the government's wide-ranging infrastructure program, "Garadagh Cement" estimates medium- to long-term demand to grow 5-8 percent per year. With limited domestic production, Azerbaijan is currently forced to import much of its clinker and cement. Clinker is an intermediate cement product, the bank said.
"Additional supply of high-quality, locally made cement will help the government and others complete the infrastructure needed to boost regional trade and tourism and diversify the country's sources of economic growth beyond the oil and gas sector," Philip Erquiaga, Director General of ADB's Private Sector Operations Department, said.
The 325 million-euro-project will be financed by 140 million euro in senior debt from the EBRD and ADB, subordinated debt from Holcim and from the cash flow of "Garadagh Cement".
"This project represents a key opportunity for ADB to support Azerbaijan's infrastructure development in a way that increases efficiency and brings valuable energy savings," Don Purka, Senior Investment Specialist of ADB's Private Sector Operations Department, said. "At the same time, it demonstrates the opportunities for foreign direct investment outside the oil and gas industry."
Garadagh Cement shareholder is the Swiss Holcim (69,4 percent), EBRD and Azerbaijan Investment Company (10 percent), private shareholders (10.6 percent).