JSC “Azerbaijan Railways” and the Asian Development Bank (ADB) signed a loan agreement in the amount of 131.5 million dollars to restore the main part of the “North-South” corridor in Azerbaijan within the framework of strengthening regional relations.
The “Report” reports that the agreement was signed by Rovshan Rustamov, director of Azerbaijan Railways JSC, and Sunniya Durrani-Jamal, head of the ADB representative office in Azerbaijan.
The total cost of this project is 160.5 million dollars, of which 29 million dollars is borne by the government of Azerbaijan. The loan will be granted for a period of 22 years, including a two-year grace period, at an interest rate determined under the ADB’s flexible loan product. Interest payments and other loan payments will be made twice a year: on May 15 and November 15 of each year.
The funds will be used to complete the restoration of the 166-kilometer highway, including civil buildings and railway crossings, on the Sumgayit-Yalama corridor section. This loan is additional financing to the Railway Sector Development Program approved in 2017 and aimed at modernizing the country’s railway operations. The bank initially allocated $150 million to “Azerbaijan Railways.”
The additional funding will allow for the expansion of the original project and the general rehabilitation of the approximately 333 kilometers of the main route from Sumgait to Yalam, including civil structures and railway crossings.
The project is expected to be completed by December 31, 2025.
Under the agreement, the borrower must periodically adjust freight and passenger rates to maintain financial stability, while hedging market risks, including adequate debt service coverage, as well as inflation, currency and rate risks. of interest. ADY must maintain a debt service coverage ratio greater than 1.1 upon completion of the approved financial restructuring plan, i.e. after 2024.
ADY is also committed to ensuring the satisfactory maintenance of the structure and condition of the tracks and other project facilities (electrification, signaling and telecommunications equipment for the project railway line) to ensure the safe and efficient operation of trains. goods and passengers.
Since Azerbaijan joined the ADB in 1999, the bank has provided more than $5 billion to support sovereign and private projects in sectors such as transportation, energy, health and agriculture.
The ADB was founded in 1966 and is made up of 68 members, 49 of which are located in the region.
