Azerbaijan, Baku, Jan.9 / Trend N.Ismayilova /
The Asian Development Bank (ADB) ended its audit of the first water project in Azerbaijan and summarized the project to improve water and sanitation services in Azerbaijan, which was approved by the ADB in 2004. This is according to the ADB Baku Office.
"The project was approved in December, 2004. Its total value was $39.9 million with the government's share of $9.9 million. Because of the delays in the project's coming into force the work started only in 2008. The prices rose so significantly by the time that assigned funds were sufficient only for the initial stage of the planned work. In this regard the ADB approved implementation of the multi-tranche program in this direction," the ADB said.
The project was aimed at improving quality, reliability and sustainability of water and drainage services, as well as more efficient use of water and sewerage systems in Agdash, Goychay and Nakhchivan. The project infrastructure also included comprehensive rehabilitation of water and drainage systems.
"The cost of the original project components increased by 218% from appraisal in 2004 to the project revision in 2008. The main reason for the project increase is increases in construction costs," the final report published on the bank's website reports. The report also says that in 2008, as the price of steel, cement, pipes and petroleum products steeply rose, the overall cost of the project increased by 220%. Specifically, the Government proposed to exclude the rehabilitation or construction of water distribution and sewerage systems, and to focus exclusively on water intake and transmission facilities in the three principal towns (i.e. Agdash, Goychay and Nakchivan).
The change resulted in: (i) civil works expanding by 40% from $12.1 million to $17.4 million, targeting water intake and transmission systems; and, (ii) equipment and materials being reduced by about 40% from $14.7 million to $8.2 million.
The MFF was approved to the sum of $600 million by the ADB Executive Board in September 2009. As the cost of the five year project increased, and in order to give full coverage of works in the abovementioned regions, ADB assigned $75 million under the MFF as the first tranche, whereas the Government of Azerbaijan assigned $25 million.
The second loan, worth $300 million, will be assigned under the second tranche. The first tranche of funds was intended to cover the additional costs associated with the price rise and was approved five years ago to improve water and sanitation services in Goychay and Nakhchivan. The ADB plans to approve the third tranche, worth $175 million, on Dec.31, 2012.
The multi-tranche financing has been the basis of 8-years of cooperation between the ADB and the Government of Azerbaijan, taking into account step-by-step investment, supported by the strategy and the program of reforms in water and sanitation areas.