WB given go-ahead to sign agreement on railway project in Azerbaijan

He said delay in the signing of the project will not impact realization of bank's new projects in Azerbaijan.

The WB issued a $450-million loan to realize the project in March 2008. Reason of its delay is that the project can be implemented only after adopting the State program on improving the Azerbaijani railway infrastructure (2008-2013) worth 1.2 billion manats. However, at present the state program has not been approved yet.

The loan will be issued through the International Bank for Reconstruction and Development for 17 years with a four-year grace period and libor+0.05% interest rate. The lacking funds will be provided by the Azerbaijani Government.

The project covers three components. The first comprises rehabilitating railway economy and just railway section from Baku to the Georgian border, shifting from 3.3 kilovolt constant stream to 25 kilovolt variable stream, replacing signal system due to shift to energy supply system.

Under the second component, it is planned to purchase 50 electric locomotives and under the third - to upgrade and to approach activity of the Railway department to requirements of market economy. At present, the government is examining its transforming to joint stock company. The project covers four years.

The borrowed funds will be gradually ($235 million) paid off through the state budget and $215 million - by own means of the Azerbaijan State Railway (ASR).

/Trend Capital/