The Azerbaijani government and the Asian Development Bank (ADB) have signed an agreement on the second loan worth $200 million for the Masalli - Astara highway construction project in Baku last week.
The agreement was signed by Azerbaijani Minister of Transport Ziya Mammadov and head of ADB's Baku office Olli Norojono.
"ADB recognizes that Masalli-Astara highway is a priority for the government. It is component of the main highway North-South, connecting Baku to the southern border. Road is in poor condition, as a result of which transport costs, delivery time, as well as the number of road accidents increase. This represents an obstacle to the non-oil sector and poverty reduction in Azerbaijan, as well as the development of regional trade," Norojono said.
He also stressed that the support from the ADB will contribute to domestic and regional trade, thereby contributing to the objectives of the State Program on Poverty Reduction and Economic Development.
According to the agreement, the loan has been allocated for 24 years with a grace period of four years and at a rate of six-month-libor +0.4 percent. The loan will cover the costs for the construction of B and C sections of the Masalli - Astara highway.
This road project is financed through Multitranche Financing Facility (MFF) for Road Network Development Programme worth $500 million. The loan was approved in August 2007. About $400 million were allocated through MFF for the construction of the Masalli - Astara road.
The first loan [$200 million] will be used to build the first road section (A) by the "Azerinsaatservis" construction company.
Azerbaijan is a member of ADB since 1999. The ADB's active credit portfolio reaches $680 million. The ADB has allocated grants amounted to $13.122 million to the Azerbaijan government and local companies during the period of cooperation.
The ADB was established in 1966 and has 67 members. The headquarters of the bank is located in the capital of the Philippines, Manila. Azerbaijan became a member of the Asian Development Bank on December 22, 1999. The country's participation share in the bank's capital is 0.5 percent. Japan and the US (31.2 per cent of the total share capital), India and China (12.8 percent), Australia, South Korea and Canada (16 percent) are the ADB leading shareholders.
