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WB,Azerbaijan signs $42 million funding agreement

13 January 2014 11:32 (UTC+04:00)
WB,Azerbaijan signs $42 million funding agreement

By Nigar Orujova

The World Bank (WB) and the Azerbaijani government signed a $42 million agreement on additional funding for a municipal waste management project in Azerbaijan.

The news was announced by the Azerbaijan Economy and Industry Ministry on January 11.

The document was signed by Azerbaijani Minister of Economy and Industry Shahin Mustafayev and WB manager on Azerbaijan Larisa Leshchenko.

Some 1.8 million tons of solid waste is generated in Greater Baku per year. The bank's experts believe that this figure will double in the next 20 years due to demographic growth and an increase in the income of the agglomeration population, the WB calculations show.

The project was approved by the WB Board of Directors in June 2008, and its implementation began in 2009. The total cost of the project is $ 41.5 million, $29.5 million of which accounts for a WB loan, while the Azerbaijani government finances the remaining part.

A twenty-year strategy of solid waste management in the capital and a plan for the development of the waste collection system were prepared, and primary research on municipal waste management in Azerbaijan was conducted as part of the project.

The bank has financed more than 50 projects worth more than $3 billion after Azerbaijan joined it in 1992.

The WB previously announced the start of drafting a new strategy of operation in Azerbaijan, while the implementation of the previous strategy for the period of 2011- 2014 will be completed in the middle of this year.

The new strategy will include several new spheres of activity. New directions could include the development of alternative energy sources and reform of higher education with an emphasis on technical and vocational education, as well as a healthcare financing system.

The Bank's Regional Director for the South Caucasus Henry Kerali is expected to visit Baku in January to discuss the bank's strategy in Azerbaijan.

WB to assist Azerbaijan's judiciary system

The bank has also started developing a new project to upgrade Azerbaijan's judiciary system.

"The mission plans to discuss the 'Judicial Services and Smart Technologies Project' (JSSTP) with the country's government," the WB said.

The project envisages the development of infrastructure and the introduction of advanced technologies in the country's judicial system. It will also cover issues related to the system's institutional development, new procedures, and approaches. The project budget is estimated at $ 100 million.

"Once the mission's assessment work is summarized, a stage of negotiations will start with the Azerbaijani government," the Baku office said. "Their start is expected at the end of the first quarter of this year."

The first loan for Azerbaijan's judicial and legal system was approved by the WB Board of Directors on June 29, 2006. At the total value of $35.6 million for a five-year project share of bank credit, it amounted to $21.6 million. The Japan Special Fund gave a grant of $3 million, while the share of the Azerbaijani government amounted to $11 million.

The WB granted a loan through the International Development Association (IDA) on standard terms, that is, 35 years with a grace period of 10 years and an interest rate of 0.75 percent per annum. At the end of a 10-year grace period, the loan payments will be at the rate of 1.25 percent, while it will be at a rate of 2.5 percent from 2026 to 2041.

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

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