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ADB will review water projects in Azerbaijan

Business Materials 29 April 2011 12:40 (UTC +04:00)

Azerbaijan, Baku, April 29 / Trend I.Khalilova /

A mission of the Asian Development Bank (ADB) will visit Baku May 3 to May 9 to review the ongoing projects in the water sector in Azerbaijan, the ADB Baku Office reported.

To date, the ADB has financed two projects to improve water and sanitation services.

ADB and the Azerbaijani government signed a loan agreement on the first tranche of $75 million on Dec.17, 2009, as part of the MFF, to implement a project for the improvement of water supply and sewage services in Goychay and Nakhchivan. The funds are designed to finance work in two regions, although plans previously anticipated three regions. The project's initial cost hit $39.9 million. Its realization expires on June 30, 2011.

"All work under the project has been completed. The work mainly covered the construction of water intake and Azersu regional offices," the report reads.

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 associated with the project's rising costs for improving water supply and sewage services in Agdash, Goychay and Nakhchivan. The project was approved five years ago and designed in 2004. Prices of construction materials, especially sewage materials, significantly increased over this period. The construction of modern sewage 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.

Gemi Qaya has already been defined as the general contractor for the second region - Nakhchivan. An Azerbaijani Land Reclamation and Water Management Company was selected as the project's executor. Following the unsuccessful tender, a new estimate was developed to improve water and sanitation services in Goychay.

Under the proposed prices of the contracting companies, within the perimeters set by the tender announced by Azersu, the costs exceed 100 percent of the real price. In this regard, new cost estimates for price revisions must be prepared by a consultant from the Asian Development Bank. The bidding procedure process will be discussed with the ADB mission. It is expected that an additional tender will be announced in the first half of May.
The MFF is also establishing the basis for an eight-year partnership between the ADB and the state, allowing for phased investments. The MFF is backed by a clear reform strategy and program in water supplies and sewage systems.

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

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

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