Azerbaijan, Baku, June 5 / Trend E. Aliyev /
Negotiations between the government of Azerbaijan and the World Bank (WB) for additional funding for the railroad project are expected to be completed by the end of June, the WB Baku Office told Trend.
"Additional funding in the amount of $ 220 million is requested for the work associated with installation of alarm systems on the railroad. We hope the WB Board of Directors will approve additional funding in the near future," the representative office said, adding that regardless of the approval of additional financing the project implementation period will be extended.
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 amounts to $673.8 million, $450 million of which account for the World Bank loan. The project is part of the State programme to improve Azerbaijan's rail infrastructure for the period of 2008-2013 worth 1.2 billion manat.
The 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 the level of 0.25 percent. Payments on the loan will be made twice a year - June 15 and Dec.15.
The railway line along the Baku-Boyuk-Kesik section is planned to be reconstructed within the loan. The 300-kilometer railway section requires immediate repair and this will be completed in the first phase.
In general, the project envisages overhauling the 503-kilometer railway. The investments will be directed to a shift from direct to alternating current toward Baku-Boyuk-Kesik, and buying 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 kilometers per hour and cargo to 80 kilometers per hour.
The project consists of three components. The first envisages rehabilitating 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 signal system due to the transition to an electric power system.
The second component envisages the purchase of =electric locomotives and the third - aligning the railway department's activity with the requirements of a market economy.