Joint IFC/BP Linkages Project Boosts Local Enterprises in Azerbaijan

As Noticias.info reports, Azmetco, a local company specializing in metering services, is the first enterprise to receive a loan from the Supplier Finance Facility (SFF) pilot, under the BP/IFC Supplier Linkage Program. The program was set up by BP, on behalf of its project partners, and the International Finance Corporation (IFC).

The SFF pilot project is a joint credit facility aimed at supporting the development of Azerbaijan's local oil and gas industry suppliers, as identified through the BP/IFC Supplier Linkage Program. Resources for the SFF are provided by BP, IFC, and the Micro Finance Bank of Azerbaijan. Loans to local suppliers are backed in large part by the local companies' contracts with BP and its partners.

The project is in line with BP and its partners' target to double their total spending with locally-owned companies by 2010, raising it to over $500 million a year.

Local companies eligible to receive SFF loans will be selected for competitive pre-qualification exercises by the BP Enterprise Centre, then will pass through MFBA's credit appraisal, and will receive final approval from the SFF Credit Committee, which comprises representatives of the three parties involved.

This pilot project is being implemented through an IFC grant agreement to MFBA and a total loan capital of $316,000. This will provide loans for up to three selected local suppliers of BP and its partners in Azerbaijan. Under this agreement, BP will provide $140,000 on behalf of its partners, IFC will provide $140,000 (of which $20,000 is for technical development and appraisal of this pilot phase), and the remaining $56,000 will be invested by MFBA.

"Through the implementation of this project, IFC recognizes the importance of the development of the oil and gas service sector for Azerbaijan's long-term development," said Shahbaz Mavaddat, Director of IFC's Southern Europe and Central Asia Department. "This project also highlights the very positive role SMEs can play in this development," he added.

"This project improves access to finance for Azeri SMEs, while also helping them to leverage linkages with large companies. The Baku-Tbilisi-Ceyhan (BTC) pipeline and SFF are good examples of the value add that large projects can bring to host countries, their businesses, and local communities," said Rashad Kaldany, Director of IFC's Oil, Gas, Mining, and Chemicals Department.