First deal may be struck to finance energy project in Azerbaijan by late 2010
Azerbaijan, Baku, Nov. 2 / Trend I. Khalilova /
The Asian Development Bank (ADB) waits for the procedure of signing the credit agreement between the Azerbaijani government and a consortium of commercial banks, attracted to finance a construction project of a 760-megawatt thermal power plant Cenub under the ADB guaranteed support, to complete, the Baku office of the bank said.
"JSC Azerenerji expressed interest in bringing this transaction to the end. It looks forward to receiving a final loan agreement from the commercial banks", the office said.
The ADB Board of Directors approved $ 232.32 million in warranty support for the project June 22. Although the mandate for negotiations expired on 16 July, taking into account the foreign banks' interest in this project, there was expressed readiness to extend the mandate letter.
The organizers of the deal are Societe Generale and City Bank.
"Over 80 percent of the loan, to be provided by commercial banks to realize energy projects, may be covered due to warranty support," the ADB office said.
The loan will be issued for 13 years with a privileged period of three year and a libor rate of +1.55 in accordance with the bank's proposals.
Azerenergy's guaranteed assistance will be the ADB's first experience in the South Caucasus.
The project cost is 664.1 million euro. In 2010, relevant agencies will allocate 117 million euro for construction. At the moment, 434 million euro have been approved for the project. The government believes attracting funds under the ADB guarantee will conclude project financing.
Bayerische Landesbank, Societe Generale and Credit Suisse allocated 300 million euro for the project. The banks issued a loan under a state guarantee for 10 years. These resources will cover half of the construction costs.
The Islamic Development Bank approved 134 million euro in loans Oct. 20, 2009. The station will operate with gas and fuel oil. The OPEC Board of Directors approved 20 million euro for Azerbaijan. Under the loan agreement, the funds are allocated for 15 years with a grace period of three years and an annual rate of 5.1 percent. The Abu Dhabi Fund for Development's Board of Directors approved a $60-million loan.
Cenub will operate with gas and fuel oil.