ADB aims to broaden activity in Azerbaijan

By AzerNews

The new partnership strategy for 2013-2017 of the Asian Development Bank (ADB) with the government of Azerbaijan will be approved in October, ADB Resident Representative Olly Norojono told media on Wednesday.

Norojono said that currently, the strategy is undergoing the final approval procedure.

The ADB representative also cited the possibility of the bank's participation in the financing of new areas such as solid waste management, alternative and renewable sources of energy, modernization of railway transport and urban public transport under the strategy.

"There are currently two ADB missions in Baku - one on transport and the other one on water supply," Norojono said.

According to him, the transport mission studies the progress of ongoing projects and discusses the possibility of allocating the second tranche under the MFF-2, the second program for multi-tranche financing of the transport sector.

The first tranche, worth $250 million, was approved for the construction of a 30-kilometer section of the Masalli-Jalilabad road, which is part of the Masalli-Shorsulu highway. The total project cost is $312 million, of which $62 million is the Azerbaijani government's share in the project.

According to Norojono, the signing of a loan agreement on the project is expected by the end of April.

The ADB's participation in financing the renovation of the railway is expected in the construction sector and laying of railway lines.

Norojono also said negotiations with the agency on alternative energy sources on the possibility of the bank's financing a project on processing of biomass will be held in August.

Earlier in April, ADB said in a report that in 2012, the performance of the oil sector was poor due to the repairs at the main Azeri-Chirag-Guneshli oil platform. Production from the ACG oilfield is expected to increase slightly in 2013, while activity outside the oil sector is expected to be a major driver of growth in 2013 and the next few years.

At present, the ADB has seven active projects in Azerbaijan with a portfolio of $990 million. 46 percent of the portfolio falls to the transport sector, while 16 percent to the energy sector. Another 36 percent is made up by urban services, i.e., improvement of water supply and sanitation.

In 2012, the bank approved projects worth $250 million for Azerbaijan, all of which were in the public sector.

According to the updated business plan of the bank's operations in Azerbaijan for 2012-2014, the total amount of funding for approved ADB projects in Azerbaijan in this period will amount to $575 million. The projects approved under the business plan, as expected, required $250 million in 2012. The figure is expected to be $155 million in 2013 and $170 million in 2014.

Azerbaijan has been a member of the ADB since 1999. ADB's operations in Azerbaijan are undertaken in line with the government's own development strategies to reduce poverty and promote sustainable and inclusive economic growth.

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 bank on December 22, 1999. The country's participating share in the bank's capital is 0.5 percent.

ADB's leading shareholders are Japan and the U.S. (31.2 per cent of the total share capital), India and China (12.8 percent), and Australia, South Korea and Canada (16 percent).