Azerbaijan: ADB to Extend $600 Million Urban Services Investment Program

The Asian Development Bank (ADB) will extend up to $600 million in loans to Azerbaijan for water and sanitation improvements in towns that have suffered from decades of neglect and underinvestment in infrastructure.

The Board of Directors today approved a multitranche financing facility that will release loans periodically to support the Government of Azerbaijan’s Water Supply and Sanitation Investment Program. The Government has earmarked up to $200 million for the 8-year investment program, with ADB financing up to $600 million from its ordinary capital resources. In the first tranche, ADB will provide a $75 million loan.

Azerbaijan’s water and sanitation system is over 50 years old, and has fallen into decline following the dissolution of the Soviet Union and the country’s independence in 1991. Services in many secondary towns are bad, with poor piped water quality, broken or clogged sewage pipes, and wastewater discharged directly into waterways. Water purchased from private vendors to augment supply is expensive, imposing a burden on the poor.

The investment program will improve the quality and coverage of water and sanitation for about 500,000 people in secondary towns and semi-urban areas outside the capital Baku. The multitranche financing facility establishes the foundation for an 8-year partnership between ADB and the government. The first tranche funds will reconstruct and build water and sewage infrastructure, expand the planning, technical and financial management capabilities of oversight agencies, and set up project management offices in the towns of Goychay and Nakhchivan. Subsequent tranches will carry out similar activities in other towns.

Introducing water meters will in turn improve the financial viability of the service providers and support conservation.

The Government of Azerbaijan is providing $25 million. The Azersu Joint Stock Company will act as the executing agency for all project activities except those in Nakhchivan Autonomous Republic, where the State Amelioration and Water Management Agency will be the executing agency.

Source: ADB, 23 Sep 2009