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07.06.2013 16:45

Until 1 July WB to fund up to $220 million for its rail project in Azerbaijan

Baku, Fineko/ The World Bank is to apply the accelerated procedure to meet the governments request for additional funding for Rail Trade and Transport Facilitation Project, the main beneficiary of which is Azerbaijani Railways (ADY).

The Baku-based WB resident office informs that WB vice-president on Azerbaijan has already applied to IMF managing director Christine Lagarde for sanction to use the fastened procedures for consideration of additional funding for the Project.

"We expect to receive consent today that will allow us and the government to sign the protocol of official negotiations on the project and submit it to the WB Board of Directors, the WB office said.

Appeal to the IMF managing director in such cases is an accepted practice.

"The WB Board of Directors is scheduled to approve additional funding in fiscal year 2013, that is, until 1 July. The Bank is ready to provide an additional loan of $200-220 million," the WB office said.

In turn, the government of Azerbaijan reported of readiness to raise $200 million from the Bank.

"It will not be needed a larger volume of funds, the source said.

The funds will be used to pay for the supply and installation of alarm systems. ADY has already selected the contractor for this order, but cannot sign a contract with it without the additional funds from the Bank. At governments request the WB completed fast (within 5 days) preparation of the project of additional funding.

Last year due to a lack of project financing the Rail Trade and Transport Facilitation Project was restructured with withdrawal of purchases of 50 locomotives out of its frames.

In spring 2008 the WBG Board of Directors endorsed a $450 million loan for Rail Trade and Transport Facilitation Project that has become the WBG biggest one since 1995 when WBG opened financing for Azerbaijan. The loan will be disbursed through International Bank of Reconstruction & Development (IBRD) for 17-year period with 4-year grace term.

The project targets to improve railway services in Azerbaijan, as well as the competitiveness, financial sustainability, operating and cost efficiency and capacity of ADY. The project with $795 million budget was focused on development of corridor toward to Georgia. After allocation of extra financing the WB credit totaled $650-670 million.

Another EUR 250 million was received from the Export Bank of Czech Republic for realization of the program of this project.

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