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ADB extends loan on highway project in Azerbaijan

Business Materials 10 August 2010 15:42 (UTC +04:00)

Azerbaijan, Baku, Aug.10 / Trend, I.Khalilova/

The Asian Development Bank (ADB) extended the terms of a loan to Azerbaijan to reconstruct the Masalli-Astara Highway this week. The loan will be extended until Dec. 31, 2013.

Since the loan agreement entered into force in January 2008, the loan resources have remained nearly unused. Earlier the loan period was set to expire June 30.

"Azerbaijan asked the ADB to extend the loan by three years," the ADB Baku Office told Trend today. "The ADB adopted the proposal."

The road will be constructed using the $200-million ADB loan. The government's participant share is $49 million.

A priority issue that must be resolved before launching the project is to purchase the lands along with the Masalli-Astara Highway.

Based on the loan agreement, the purchase issue was set to be resolved by June 2010. However, the process is only now nearing completion.

The project also faced delays after Azeryolservis canceled a tender on the construction of the first section of the highway. However, the Transport Ministry assured Trend earlier today that the issue will be resolved by the third quarter.

The Masalli-Astara Highway is divided into three sections. A contractor is now being found to construct the first 21 kilometers of the road.

The ADB Board of Directors approved the project Sept. 28, 2007. Under the agreement, the ADB issued loans worth $190 million partially from its common resources for 24 years with a four-year grace period and libor +0.6 interest rate. Loans were also issued at $10 million under preferable conditions for 32 years with an eight-year grace period and one-percent interest rate.

Credit for the highway was allocated within the Multitranche Financing Facility Mechanism with a sum total of $500 million to finance three road projects. Two projects worth $255.4 million have been coordinated. The bank has provided up to 2014 to use the remaining funds.

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