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WB to present recommendation to ‘Azerbaijani Railways’

Business Materials 15 October 2010 17:23 (UTC +04:00)
The World Bank’s mission led by the head of project team Marco Lourents to review the implementation of the project to support transit by railway and trade in Azerbaijan, the World Bank Baku Office said.

Azerbaijan, Baku, Oct.15 / Trend, N.Ismayilova /

The World Bank's mission led by the head of project team Marco Lourents to review the implementation of the project to support transit by railway and trade in Azerbaijan, the World Bank Baku Office said.

The mission will stay in the country until Oct.18. The main goal of the mission is to assist and present recommendations to the JSC Azerbaijan Railways within the works on the implementation of the project. Loan agreement between the Azerbaijani Government and the World Bank was signed in December 2009.

Today the JSC is under the stage of selection a consulting company that will help the Railways to transfer to international financial accountability standards.

Introduction of international financial accountability standards will allow better understanding the financial situation in any subdivisions of the company that will provide full transparency of its activity, World Bank Senior Infrastructure Specialist, Transport Program Team Leader for Central Europe and the Baltic Countries, and Team Leader for the Rail Trade and Transport Facilitation Project in Azerbaijan Gerald Ollivier told Trend earlier.

Of the total investments, $450 million (along with Azerbaijan's participation share, the project is estimated at $673.8 million) was allocated as a credit to Rail Trade and Transport Facilitation Project in Azerbaijan. WB funds will be spent on the electrification of the railway on the stretch from Baku to the Georgian border, the acquisition of locomotives.  

The credit resources are allocated by the International Bank for Reconstruction and Development (IBRD) for a term of 23 years with a grace period of eight years at a cost - a six-month libor plus spread is changing. Commission on the loan, which will be paid by the borrower, was determined at the level of 0.25 percent. Payments on the loan will be made twice a year - 15 June and Dec.15.

The railway line along the Baku-Boyuk-Kesik section is planned to be reconstructed within the loan. The 300-kilometer railway section requires immediate repair and this will be completed in the first phase.

In general, the project envisages overhauling the 503-kilometer railway. The investments will be directed to a shift from direct to alternating current toward Baku-Boyuk-Kesik, and buying 50 new locomotives for operation on the alternating current. The WB office in Baku said the project envisages increasing the railway speed for passengers to 100 kilometers per hour and cargo to 80 kilometers per hour.

The project consists of three components. The first envisages rehabilitating the railway sector, namely the plot from Baku to the Georgian border, the transition from 3.3 kV DC to 25 kV AC, and replacing the signal system due to the transition to an electric power system.

The second component envisages the purchase of 50 electric locomotives and the third - aligning the railway department's activity with the requirements of a market economy. The government is already considering converting the company into a joint stock form.

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