Azerbaijan, Baku, April 20 / Trend N.Ismayilova /
The Asian Development Bank (ADB) is aimed at improving the first loan disbursement for multitranche financing (MFF) of the water and sanitation services improvement project in Azerbaijan, ADB Baku Office head Olly Norojono said.
"We are in active negotiations with Azersu to accelerate the development of the first tranche, and I think, will soon see positive results of these studies," he said.
The project's initial cost hit $39.9 million. The ADB first allocated a loan amounting to $30 million to finance the project, but $9.9 million fell to the government's share. The ADB and the Azerbaijani government signed a loan agreement on the first tranche of $75 million as part of the MFF to implement a project to improve water supply and sewage services in Goychay and Nakhchivan on Dec.17, 2009. The funds are designed to finance work in two regions, although plans previously anticipated three regions. These funds, including the government's share of $25 million, are sufficient to fully finance the work in these two regions.
Under the loan agreement, the ADB's first tranche loan of $75 million is allocated for a 24-year term with a four-year grace period and interest set according to its libor+0.2-based lending facility.
The first tranche will cover additional costs in connection with the rising costs of the project to improve water supply and sewage services in Agdash, Goychay and Nakhchivan. The project was approved five years ago and designed in 2004. Prices on construction materials, especially sewage materials, significantly increased over this period. The construction of modern sewerage system facilities covered by the project also affects its value. The ADB project also provides for the complete restoration of water supply and sewage services in the selected regions.
A contractor is already determined to carry out construction works in Nakhchivan.
ADB approved second tranche worth $350 million to cover the expansion of the coverage zone to four other cities - Agdash, Agjabadi, Beylagan and Balaken.
The third tranche is expected in the amount of $175 million and will create centralized water supply and sewerage systems around Baku.
The MFF is also establishing a foundation for an eight-year partnership between the ADB and the state, allowing for phased investments; it is backed by a clear reform strategy and program in the field of water supply and sewage systems.
The total cost of the MFF was approved in the amount of $ 600 million by the ADB Board of Directors in Azerbaijan in September.
AICO Consulting / European Consultants Organization acts as Azersu's consultant to this project.