On May 29, Azerbaijan to sign a loan agreement with Japan on $260 million water project

An Azerbaijani government source says that the draft agreement has been fully considered and approved.

“Giving of authorities allows to sign the agreement already on May 29,” the government said.

Earlier at a media conference in Baku Azersu’s president Nizameddin Rzayev said that in early February the parties also signed exchange notes on the project and voiced a hope for signing of a loan agreement on the project already in the 1st half of 2009.

Earlier Azerbaijan and Japan have agreed the taxation regime within the project. As tax conditions contrast to regime on double taxation avoiding between the two countries, the loan agreement to be signed by Japan and Azerbaijan will be ratified by Azerbaijani Milli Majlis (parliament).

The Japanese party is going to finance $260 million for the project.

The agreement will cover financing for the project of watersupply & sewage system upgrade in 10 regions of the country. The JBIC project consultants are Tokyo Engineering (Japan) and ASPI Engineering (Azerbaijan).

According to their recommendation (cost of the project on each city is $30-40 million), the Bank increased estimate of its participation in the project from $160 million up to $260 million for five cities. Total cost of the project to cover Khachmaz, Barda, Alibayramli, Salyan, and Neftchala is estimated at $310 million.

JBIC is ready to apply a combined scheme of financing. One portion of its credit line will be extended for 30-year period under annual rate of 1.4% and the second one for 40-year term under rate of 0.65%. At the same time services of consultants on preparing selection and control over project works will be financed due to credit funds disbursed under rate 0.11% per annum for 40-year period.

/Azerbaijan Business Center/