Azernews.Az

BAKU - The World Bank has approved a $241.6 million loan to finance a project on upgrading a major highway in Azerbaijan, according to an agreement signed with the government in Baku Wednesday.

The Third Highway Project envisions upgrading a 100 km section of the existing two-lane Baku-Shamakhi road into a four-lane motorway. The project will improve safety and efficiency of the road and strengthen management of the nascent motorway network.

The allocation consists of a $70 million credit from the International Development Association (IDA), a member of the World Bank group, and a $171.6 million International Reconstruction and Development Bank (IBRD) loan.

The IDA loan will be allocated for 20 years, with a 10-year grace period, while the IBRD credit is to be repaid over 17 years, with a four-year grace period.

The project is estimated at a total of $356.15m, with the remaining part to be allocated by the Azerbaijani government.

The loan covenant was co-signed by Azerbaijani Transport Minister Ziya Mammadov and the head of the WB office in Baku Joseph Owen.

The project will help provide better transport services in mountainous central and northern regions of Azerbaijan, which have considerable potential for tourism and industrial production. This section of the road also constitutes part of the shortest route to the Georgian border, and will connect metropolitan Baku area with major agricultural producers in the west of Azerbaijan. In addition to upgrading the Baku-Shamakhi road, the project will help the government establish a framework to develop and manage the motorway network which includes modern financing scheme and maintenance practices for motorways.

With this project, the World Bank starts the third phase of its assistance to Azerbaijan’s road sector. This phase will use a two-fold approach, one focusing on Azerbaijan’s motorway network and transport corridors, and another focusing on secondary, local roads as part of the regional development strategy.

Azerbaijan joined the World Bank in 1992. Since then, commitments to the country have reached approximately $2.16 billion for 42 projects.