OREANDA-NEWS. December 17, 2009. Within the framework of the Baku visit of Matthew Westfall, the head of the ADB Central & Western Department’s Urban Services Division, the Asian Development Bank (ADB) and the Government of Azerbaijan have signed a USD 75 first tranche loan under the USD 600 million Water Supply and Sanitation Investment Program.

The Bank says that focusing on critically-needed investments in regional towns, the multitranche financing facility establishes the foundation for an 8-year partnership between ADB and the government, allows for phased investments, and is backed by a clear strategy and program of reforms.

The first tranche funds will reconstruct and build water and sewage infrastructure, expand the planning, technical and financial management capabilities of oversight agencies in the towns of Goychay and Nakhchivan. The loan will also finance institutional reform and capacity building activities to ensure efficient and financially viable long-term operations.

ADB’s loan has a 24-year term with a 4-year grace period and interest set according to its LIBOR-based lending facility. The Government of Azerbaijan is providing USD 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 serve in this role.

In addition to improving network infrastructure and strengthening the capacity of newly established water companies in the project towns of Goychay and Naxchivan, the first tranche loan will support investments to rehabilitate pumping stations, strengthen pipe networks, introduce supply zoning, and install meters. This will lead to improved water quality, greater continuity of service, higher water pressure, and the introduction of volumetric metering, a required first step towards achieving economic viability of the new water companies.

"For Azerbaijan, ADB’s assistance provides more than simply financing; it offers knowledge and support for policy and structural reforms, strategy formulation, innovative project design, and sound implementation," says Matthew Westfall, Director of Urban Services for ADB’s Central and West Asia Department. "The investment program will improve the quality, coverage and continuity of water and sanitation services for about 500,000 people in secondary towns and settlements around the capital Baku. It will also raise the capacity of agencies tasked with planning, managing and operating services. Overall, our focus is on delivering results,” Mr. Westfall said.