Today.Az » Business » WB corrects loan agreement on railroad project in Azerbaijan
27 April 2009 [14:38] - Today.Az
WB has agreed with the Azerbaijani government about changes in the
loan agreement on Azerbaijani railroad transit and trade.
The agreement is worth $673.8 million, WB Baku's office said on April 27.
'There is necessity in additional survey due to changed situation on the world capital markets, as well as delay with signing of the agreement 9WB approved loan in the amount of $450 million in 2008," the office said.
Term of reforms conducted in the Azerbaijani railroad is planned to be specified, the government said. These reforms envisage turning the Azerbaijani railroad into a joint-stock company, then in a holding company. The agreement envisaged completing its status into a
joint-stock company by late 2009 but turning into a holding company by 2010.
This term is planned to be postponed for a year. This term is planned to be specified and indicated in the loan agreement.
Moreover, WB suggested changing rate of loan granted upon terms of the International Bank for Reconstruction and Development. WB had to increase IBRD's rate from libor-0.05 percent to libor+1.15 because of hard terms while borrowing resources on the world markets. WB also has to draw resources from financial markets.
Presently, libor rate hits two percent, i.e. loans through IBRD remain attractive despite change of fixed rate.
After the loan agreement is agreed upon these changes, it will be submitted for signing. It will be possible before five year state program is approved. The state program worth 1.2 billion manat envisages improvement of the Azerbaijani railroad infrastructure.
WB project's actions cover most part of the state program. WB project's loan agreement is likely to come into force after program's approval.
Loan resources were granted through IBRD for 17 years given preferential four year period. The rest part will be provided owing to share of the Azerbaijani government.
The project consists of 3 components. The first component envisages rehabilitation of railroad, namely railroad plot from Baku to Georgian border, passage with 3.3 kilovolt of direct current, replacement of signal system due to transfer to electric power system.
Purchase of 50 electric locomotives is envisaged within the second component, the third one covers modernization of the Railroad Department in accordance with market economy. Presently, the department's reformation in joint-stock company is being considered in
the government. The project covers 4 years.
Borrowed funds ($235 million) will be partially paid off owing to state budget, but $215 million owing to the Azerbaijani State Railroad's own finds.
/Trend Capital/
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