KfW and Azerbaijan Government Delay Agreeing Conditions of Credit on Construction of Transmission Lines AzDRES - Imishli

Oil&Gas Materials 19 December 2006 13:29 (UTC +04:00)

The process on completion of a credit agreement between Germany KfW and the Azerbaijan Government on the project of construction of transmission lines AzDRES Imishli might be delayed for 2-3 months, a source in the Cabinet of Ministers of The country told Trend.

According to the source, credit conditions of the project have not been agreed yet, since there have been controversies between the Ministries of the Country. The credit agreement will not be signed till the end of the year, as it was expected earlier.

Namig Abdullayev, Head of KfW Baku Office, told Trend that the Bank had submitted three alternatives on granting the credit to the Azerbaijan Government. The credit will be considered for 12 years with the lax period of two years. The interest rate of the credit has been proposed on the floating interest (euro/libor), fixed interest (euro/libor), and the fixed interest on the date on paying of each tranche.

The negotiations on the credit were launched in June, 2006. However, the parties did not agree on the interest rate of the forthcoming credit. It will be for the first time when the German Bank will finance an Azerbaijani project on half-commercial basis.

Mr. Abdulayev considers that the interest rate of the half-commercial credit will be able to compete with the interest rates of ADB, EBRD, and WB (IBRD).

The Bank granted в'¬ 30 mln. and paid all the cost of the project. The project envisages the construction of transmission lines with the length of 195 km from AzDRES to Imishli. A power station is expected to be constructed in Goranboy. In addition, the field of supply in the Imishli Power Substation with the capacity of 330 KWatt is expected to be widened through installing a separate cell. After the construction of the transmission lines are complete, their capacity will increase from existing 200 MWatt up to 700 MWatt.