KfW to finance 52 per cent of major water project in Azerbaijan

Business Materials 5 July 2012 13:56

Azerbaijan, Baku, July 4 /Trend I.Khalilova/

German development bank KfW is ready to provide 150 million euros of additional funding for the project to restore the water supply and sanitation in the cities of Ganja and Sheki (345 and 347 km from Baku, respectively), the government told Trend on Thursday.

"The financial contract to provide 83 million euros of these funds has already been submitted to the Government of Azerbaijan" the source said. "Provision of these funds by the bank is expected before the end of 2012."

KfW will provide a single financial contract to Azerbaijan for allocation of the remaining 67 million euros. As a result, the total amount of funding provided by the German bank to implement the water project will be 187 million euros.

The budget of the project's first stage is 55 million euro. In accordance with the records signed in Berlin in October, 2006, KfW allocated a 37 million euro loan and Switzerland's State Secretariat for Economic Affairs allocated 10 million euro as a grant. The Azerbaijani government's share in the project is eight million euro.

"The total project cost is estimated at 360 million euros based on the approved feasibility study for the project and the contracts signed with contractors," a source in the government said.

The possibility of attracting funds from other sources may be considered for the remaining 173 million euros (excluding loan of KfW)

"Although this issue has not been the subject of discussion, the probability is not excluded," the source said.

The first phase of the project envisages measures to provide water to Sheki at 100 per cent and Ganja - at 50 per cent. Further development of the water supply system of Ganja is provided in the frame of the second and third phases. The main purpose of the German bank is 100 per cent connection of consumers to the water network.

The construction work has already been started in Ganja and is being carried out by the Turkish company Hasalsan. A tender for the definition of a contractor for Sheki was announced in May and closed on June 21. However the completion of the project will be delayed until 2014 due to deferment says with the definition of a contractor to start the construction in Sheki.

Part of the water supply system was reconstructed at the initial stage of the project in Sheki. The current reservoir with a volume of 2000 thousand cubic meters was recovered, including the installation of chlorination and construction of trunk water line with length of 2.8 kilometres and the site of water intake facilities Kish. The subject of the tender is to improve the water supply of Sheki with a population of 75,000 people. Under the project, the construction of three new reservoirs with a capacity of three thousand cubic meters each, the reconstruction of the existing reservoir with a capacity of one thousand cubic meters are assumed.

Coverage of consulting services and a partial restoration of infrastructure in Sheki, and in particular the purchase of equipment are expected through SECO funding.