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BNP Paribas Terms on financing project on Widening Highway Till Georgian Border Can Be Softened

Business Materials 4 November 2006 14:17 (UTC +04:00)

The Azerbaijani Ministry of Finances intends to continue talks with the French BNP Paribas to simplify the terms of the credit for the project on widening the highway from Hajigabul till the border with Georgia from dual road to double dual, Trend reports.

The Cabinet of Minister informed Trend that the loan offered by BNP Paribas will be borrowed from the Japanese Bank for International Cooperation (JBIC). The direct attraction of funds from the Japanese Bank will cost cheaper.

The government regards the International Bank of Azerbaijan as a mediator.

Meanwhile, the Finances Ministry supposes the difference between the terms of financing of BNP Paribas and JBIC is inconsiderable, because the Japanese Bank demanded from the country a first time payment as security deposit. As a result the difference is only 0.2%-0.3%. So far, JBIC has financed the Azerbaijani projects on the standard terms: 40 years with a grace period of 10 years and annual interests rate of 0.75%.

According to the project on the credit agreement, BNP Paribas will give the credit on the following terms: 13 years of the credit period, with the lax period of 3 years, and the interest libor+0.5 percent. The Finances Ministry still hopes in the cut of interests as the talks are still to complete.

According to a source in the Government, the Bank expresses its readiness to grant $300 m. for these aims. These funds will be sent to the financing of the sections of the highway Hajigabul Yevlakh (184.8 km) and Gazakh- the Georgian border (38 km).

The Transport ministry has elaborated a feasibility study on the basis of the technical documentation prepared within the TACIS technical aid.

To build the 400 km first-class road on the section from Hajigabul to the border with Georgia, proposals put forward by the World Bank. Slovakia's Export Bank is currently under consideration too.

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