Azernews.Az

By Nigar Orujova

The World Bank (WB) Regional Director for the South Caucasus Henry Kerali will pay his first visit in 2013 to Azerbaijan on February 25-26.

"During the visit Kerali will exchange views with the Azerbaijani government within the cooperation programme," the WB Baku office said on Thursday.

The current strategy of cooperation with Azerbaijan is developed for the period between 2011-2014. This is based on such priorities as strengthening the non-oil sector of economy including development of infrastructure and agriculture. In addition, the bank's activities will also focus on improving the effectiveness of social services, including health, education, social protection and water supply.

A new two-year project plan within the Country Partnership Strategy (CPS) for 2011-2014 is planned to be delivered to the board of directors in March for approval. Currently, the projects to be financed by the bank in 2013-2014 are being specified with the government, but no official complaints to the WB were made.

At present, drawing additional funding for the judicial system modernization, as well as water and sanitation services and integrated solid waste management improvement are under discussion.

Redesigning necessitated additional funding

The need for additional financial resources appeared in the last two projects due to changes in design of these projects. The funds are required to expand judicial system modernization project and the WB Baku Office is considering additional funding for the current project or a new project.

Consultations on additional funding within the judicial system modernization project will start during the visit of the WB mission headed by Amitabha Mukherjee to Baku on February 23, the WB Baku office said.

"The issue of delivering additional funding for the project will be resolved after the documents are prepared," the WB office said. "If necessary, the government will make a request to the bank."

In January, the first discussions were held to specify operations, which may be included in the new project, as well as opportunities for drawing additional funds.

The new WB loan may be attracted within a separate project or in the form of additional funding for the ongoing project that has been in place since 2006 in order to accelerate the approval procedure. According to optimistic expectations, its assertion is expected by the end of June 2013, while the WB mission will be in the country until March 2.

The WB approved the first loan for the Azerbaijani judicial system on June 29, 2006. Bank's share in $35.6 million worth five-year project amounted to $ 21.6 million. A grant worth $3 million was allocated by the Japan Special Fund, the share of the government of Azerbaijan totaled $11 million.

The WB loan is granted within the International Development Association on standard terms of 35 years with a 10-year grace period and an interest rate of 0.75 percent per year. Repayment of 1.25 percent in interest rates will begin after the completion of 10-year grace period. The interest rates will be 2.5 percent from 2026 to 2041.

In 2011, the World Bank approved additional $9.2 million in funding for this project from the IDA and $24.2 million loan from the International Bank for Reconstruction and Development (IBRD). The government's share in the project amounted to $28.3 million. The total amount of funding for the project is estimated at $61.7 million.

The key objective of the project is to develop the capacity of the judicial system of Azerbaijan, improve its efficiency, as well as improve public access to information and services.

The Azerbaijani government also intended to obtain additional financing from WB for its first project to improve the water supply and sewerage services in the country.

The project covers a complete restoration of the water supply and sewerage system in the Shamakhi, Gabala, Saatli and Sabirabad regions. As a result of changing the design of the project, the need for additional resources was revealed for the last three regions.

The WB allocated $230 million for the first water project at a total cost of $310 million. The government allocated $80 million to finance the project. Initially, the project included 22 regions, but their number was reduced to four as a result of restructuring.

The project implementation period was extended until the end of February 2013 due to the unfinished work, whereas it was planned to be completed in January 2012.

The project will be implemented in parallel with the second national project concerning the water supply and sewerage services in Azerbaijan which must be completed in late February 2013. The number of regions covered by the second project has been also reduced from 20 to eight. As a result, the project will cover the full restoration of water and sewerage system in Siyazan, Shabran, Agsu, Ismayilli, Masalli, Lerik, Yardimli and Jalilabad regions.

The WB allocated $230 million through the IBRD and 30 million through IDA for the second water project at a total cost of $410 million. The government allocated $150 million to finance the project.

The bank also allocated $29.5 million to the project for integrated waste management in Baku. The project will be expanded to cover the whole country.

Currently the WB is working with the Azerbaijani government in two directions - development of new projects and improving work within the existing project portfolio.

Since 1992, during the whole period of cooperation with Azerbaijan, the World Bank has financed 56 projects in various sectors of the economy for a total of $3.4 billion in loans and grants of the International Development Association (IDA), and the International Bank for Reconstruction and Development (IBRD). During this period, the World Bank has granted Azerbaijan with $42 million for development of projects and feasibility studies and organization of training.