Azerbaijan, Baku, May 1 /Trend A.Akhundov/
The Azerbaijani government has spent only 0.9 per cent of the loan from the World Bank (WB) provided for the Railway Trade and Transport Facilitation project. The Bank of Azerbaijan has allocated $450 million for the project.
Slow spending of funds is due to the fact that the main contract for this project is significant and requires a long lead time in terms of preparation of tender documents, receipt of proposals and so on, a Baku bank representative told Trend on Tuesday.
"If there were any funds spent in the past, they were minor," the office of the bank said.
Currently, the preparatory work for tenders under the project is being implemented and will be announced by the end of the year, the bank reports.
The loan agreement between the Government and the World Bank was signed in December 2009. The total cost of the project promoting rail transit and trade amounted to $673.8 million, $450 million of which account for the World Bank loan. The project is part of the State programme to improve the rail infrastructure of Azerbaijan (2008-2013) worth 1.2 billion manat.
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 a rate of 0.25 per cent. Payments on the loan will be made twice a year on 15 June and Dec.15.
The railway line along the Baku-Boyuk-Kesik section is planned to be reconstructed using the loan. The 300 kilometre section requires immediate repair and this will be completed in the first phase.
In general, the project envisages overhauling the 503 kilometre railway. Investments will be directed to a shift from direct to alternating current toward Baku-Boyuk-Kesik, and the buying of 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 kilometres per hour and cargo to 80 kilometres per hour.
The project consists of three components. The first envisages reconstructing 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 signalling system due to the transition to an electric power system.
The second component envisages the purchase of 50 electric locomotives and the third is the aligning the railway department's activity with the requirements of a market economy.