Azernews.Az

The Asian Development Bank (ADB) will provide a $160 million loan to Azerbaijan for upgrading its aging power transmission facilities, the bank`s Baku office said.
The 25-year loan will help build a double-circuit, 220 kilovolt transmission line, and associated substation facilities, replacing two existing lines that have been in use for some 60 years by state-owned power company, Azerenergy.
The project is valued at $240 million. The remaining $80 million will be allotted by Azerenergy.
Over 20% of the country`s energy equipment, and more than half of its network facilities, are well beyond their useful life, resulting in frequent power failures, system losses, and the threat of a collapse of the energy grid, the ADB said.
The upgrade will remove transmission choke points, lower system losses, and provide a more stable power supply, especially in the key Azeri industrial hub near the capital city of Baku.
It will also cut the need for imported electricity, optimize the country`s hydropower resource, and reduce fossil fuel consumption and pollution. The gas and oil saved will be exported, giving a boost to government coffers, ADB experts say.
The improved power supply will be particularly beneficial to rural dwellers, who make up nearly 50% of the 8.5 million population suffering from an unreliable supply of basic services, which hinders economic growth and employment opportunities.
The energy sector plays a central role in Azerbaijan`s economy, contributing one-third of the country`s Gross Domestic Product in 2007. But unlike oil and gas, the power transmission and distribution industry has suffered from a major lack of investment in the past, according to the ADB.
ADB`s loan will support the government`s priority program of reforming and developing the power industry to protect its energy security. It will also act as a potential catalyst for attracting private sector investment.