ADB ready to direct railway loan to new project in Azerbaijan

Business Materials 29 July 2015 15:23 (UTC +04:00)

Baku, Azerbaijan, July 29

By Azad Hasanli - Trend:

The Asian Development Bank (ADB) is ready to redirect the loan allocated for the reconstruction of the Baku-Sumgait railway to finance another site of the railway in Azerbaijan, the ADB's Baku office told Trend.

Currently, the reconstruction of the Baku-Sumgait railway is being carried out with help of the state funds. The government has already updated the 52-kilometer section out of the 63-kilometer long site.

Additionally a 1.6-kilometer long section will be built.

"Due to that neither the bank nor the government of Azerbaijan waived the loan, the timeframe for its approval by the bank's board of directors was moved to September 22, 2016," said the ADB office.

The bank's office also told Trend that the loan can be directed at the expansion of the Baku-Sumgait railway or another site can be chosen, adding that this depends on the proposals of Azerbaijan's government.

It was also noted that the railway project was included as a reserve project in the ADB's business plan on Azerbaijan for years 2015-2017.

"The projects, included in the business plan, have been divided into the approved projects, the implementation of which has been approved by the government, and the reserve projects - in case if the government expresses a desire to proceed with their implementation," the ADB representative office said.

As an example, the source cited a project to improve the energy system of Azerbaijan. Its implementation began in 2015.

"We have postponed the project to improve the energy system of Azerbaijan for three years because the country's ministry of finance was not ready to get a loan for it," the ADB representative office said. "But this year, the government has agreed to start implementing the project. A similar situation is observed with the railway project which we will postpone until the government decides to start discussing this project or abandon it completely."

At present, the ADB business plan for 2015-2017 is being considered by the Cabinet of Ministers.

"If the government decides to eliminate the railway reconstruction project, we will completely abandon it," the source said. "Otherwise, it can be included as a reserve project in the business plan for 2016-2018."

The project for improving Baku-Sumgayit railway line envisages reconstructing around 50 kilometers long railroad tracks, renewing and modernizing the power supply and signaling systems.

Moreover it is planned to purchase 10 passenger cars as part of the project.

It is planned to implement this project with the loans from ADB.

Initially, the project's cost was estimated at $200 million, but after the detailed study, its cost increased to $500 million, the bank earlier told Trend.

Moreover, the cost of the project increased as the country's government bought several locomotives that will run on this route.

ADB was founded in 1966 and has 67 members. The bank's headquarters is located in Manila, the capital of the Philippines. Azerbaijan became ADB member on December 22, 1999. The country's share in the bank's capital is 0.5 percent.

ADB's leading shareholders are Japan and the United States (31.2 percent of the total share capital), India and China (12.8 percent), Australia, South Korea and Canada (16 percent) and so on.

Since the beginning of cooperation, the Asian Development Bank has allocated around $2 billion to Azerbaijan for the implementation of projects in the sphere of road construction, energy, irrigation, improving water supply and sanitation.