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Azeri gov't, KFW to discuss Energy project conditions

Business Materials 10 March 2006 18:43 (UTC +04:00)

Electric transmission lines AzHES-Imishli construction project will finally be agreed between the German bank for reconstruction KFW and the government of Azerbaijan in April. KFW has allocated 30mln Euro for the development of the project.

According to the head of KFW Baku office, Natik Abdullayev, the relevant agreements might be signed by the end of negotiations with the government. The project proposed for KFW includes building of electric transmission lines with 195km continuity from AzHES till Imishli. It also considers sub-station building in Geranboy and expansion of the energy transmission field on Imishli sub-station with total power of 330Kvt, by creating a separate cell. After the termination of electric transmission lines building, total power of electric lines will increase from 200MW to 700MW.

The project will be financed by the German bank on semi-commercial conditions. Credit will be granted for 12 years with 2-year beneficial period and fixed rate (though it would tied to libor) According to Abdullayev, terms of this energy project were mollified due to the grant received from the German fund of energy savings and effective energy use. As a result, the banks financing consists largely of grants, otherwise credit term would have been for 8-10 year term with the high interest rate. It comes as the first grant of this type that Azerbaijan receives from the German government, and it is explained by the fact that Germany considers Azerbaijan as part of Europe. It means that if a developing country is ready to undertake actions connected with the regional development, Germany would be ready to provide such assistance.

Up to now Azerbaijan has received from the bank beneficial credits with the term of 40 years with the grace period of 10 years and 0.75% interests.

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