ADB to Confirm a Multitranche Package for Road Projects in Azerbaijan

Business Materials 10 April 2007 12:24 (UTC +04:00)

Azerbaijan, Baku / corr. Trend I.Khalilova / The Asian Development Bank (ADB) is planning to hold talks with the Azerbaijan government during the first half of 2007 regarding credit for road projects, which will be financed within the framework of the Multitranche Financing Facility (MFF).

The Baku office of the ADB reported that the Board of Directors of the Bank intends to finance a multitranche package to the amount of $500mln and credit agreement on the Masally-Astara automobile route reconstruction project, to be financed at the expense of the first tranche of MFF. As of preliminary estimations by a US consultant company TERA, the cost of the road is estimated to be approximately $215 mln, including $190 mln of ADB credit and $25 mln of the Azerbaijan government.

An ADB loan will be partially allocated out of the bank's ordinary resources ($170 mln) (for 24 years with a 4-year privileged period and rate of libor+1% per annum), and $20mln on privileged terms (32 years with the privileged period of 8 years at a rate of 1% during the grace period, and 1.5% thereafter). The privileged part of the credit is allocated for the reconstruction of secondary rural roads, connected to automobile mains. In case the cost of the project is corrected, the sum of the credit allocated in ordinary terms will undergo some changes.

In accordance with the contract, TERA is committed to carry out 80% of the work, as it is in charge of the preliminary evaluation of the project. The final budget of the project will be set up by the second consultant, which will be attracted after the approval of a loan for development of a tender package.

Within the framework of MFF, the ADB plans to finance three road projects, including the Masally-Astara road, which is currently under consideration.