OREANDA-NEWS. January 6, 2010. The Baku-based ADB resident office informs that the consultants drawn by the Bank completed successfully the first stage of technical assistance to preparation of MFF Preparing the Railways Sector Development Program.

 “It was carried out assessment of the current condition of railway sector and a relevant report was submitted to the government. As there was not clarity with investment project, ADB preferred to curtail technical assistance to close joint stock company Azerbaijan State Railway (ADY) as there was not subject for activity of consultants. But the Bank declines neither from further technical assistance nor from following financing for investment projects. We have interest to this sector, experience and capacities of financing for such projects. In this connection we hope that the ADB transport mission to visit Baku before the end of January is to clarify the prospects of co-operation between ADB and ADY,” the ADB office said.

The Bank expected result of its technical assistance by the end of 2009, but ADY restructuring carried out in summer made its correctives.

Earlier the ADB Board of Directors approved a USD 1 million grant to be disbursed for the Government of Azerbaijan within Preparing the Railways Sector Development Program.

Earlier the government and ADB achieved a principal agreement on a USD 550 million loan for Azerbaijan State Railway Company (ADDY), on the basis of which ADY was established.

Preliminarily the parties agreed that ADB will prepare a project for ADY upgrade on north-south segment (from the border of Azerbaijan with Russia to the border with Iran). But ADB was also ready to fund any works within State Railway Development Programme.

The Bank is ready to sponsor operations under Multitranche Financing Facility (MFF) scheme.

The Ministries of Transport, of Finance and of Economic Development of Azerbaijan were commissioned to work over all proposals jointly, select the most attractive ones and propose a joint initiative to the government.

The Azerbaijani government is examining investors for reconstruction of railway tracks via Russia-Baku-border with Iran (North-South transport corridor) within State Railway Development Program 2008-12. The European Bank of Reconstruction and Development (EBRD) and Asian Development Bank are to ready to finance this project. Both EBRD and ADB are ready to finance by USD 500 million for these ends. EBRD is going to give funds jointly with European Investment Bank (EIB) with USD 500 million and German bank KfW.

The railway segment of West-East corridor will be financed by World Bank Group (USD 450 million) and as it is expected by Japanese Bank for International Development (USD 260 million). German bank KfW is ready to fund renewal of rolling stock of Azerbaijan State Railway Company (ADDY).

The State Program is estimated at AZN 1.2 bn (more than USD 1.5 bn).