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KfW ready to continue supporting water project in Azerbaijan

Business Materials 31 January 2013 16:28
German Development Bank KfW is ready to continue funding the further reconstruction of water supply and sewage systems in Ganja and Sheki, undertaken jointly with the Azerbaijani government as a part of a ‘Second open municipal infrastructure programme’.

Azerbaijan, Baku, Jan. 31 / Trend I.Khalilova /

German Development Bank KfW is ready to continue funding the further reconstruction of water supply and sewage systems in Ganja and Sheki, undertaken jointly with the Azerbaijani government as a part of a 'Second open municipal infrastructure programme'.

As Azersu, the national water operator told Trend on Wednesday, the bank's delegation is currently on a three-day visit to Baku. It includes project manager Ursula Hister and chief engineer Thomas Wolf.

During a meeting held at Azersu, Hister praised the cooperation in the project, noting that in the future KfW is ready to support restoration of the water and sewerage systems in these two cities. Financial issues, the current progress in the works and in particular construction work, management, water treatment, installation of meters and those activities to be implemented within the next stage of the project will be discussed during the visit.

KfW allocated two loans to a total amount of 137 million euros within the project. In accordance with the agreement signed in Bern in October 2006, the first KfW loan to the tune of 37 million euro was granted for a period of 40 years with a grace period of 10 years and interest rate of 0.75 per cent per annum. The second 100 million euros worth loan was allocated under the agreement signed in December 2012 for 12 years with a grace period of three years and a rate of 1.96 per cent per annum, whereas the bank previously offered 2.35 per cent.

The German bank signed agreements for a total of 102 million euros (100 million euros in loans and two million euros in grants) on December 20, 2012 to finance the second and third phases of the project. Of these funds, 43 million euros were provided for the restoration of water supply and sewage systems in Ganja and Sheki and 57 million euros for the construction of wastewater treatment plants in these cities. Grant funds are being provided to manage Water Channel departments for two years.

The first phase of the 'Second open municipal infrastructure programme' envisaged a restoration of water source, construction of water mains and new reservoirs in Sheki and Ganja, as well as reconstruction of the water and sewerage network in Ganja. Work during the first stage was completed in Sheki and is nearing completion in Ganja. As a result of this project, it is expected to improve the supply of drinking water and sewerage services to 500 000 people living in the two cities.

An additional $150 million is required to complete the project. Total project cost including loans from the German bank, interest of the Azerbaijani government and a grant from the Swiss State Secretariat for Economic Affairs Seco worth 10 million euros, is estimated at $366 million.

Ganja is located in the west of the country, 345 kilometres from Baku while Sheki is 380 kilometres from the capital.

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