ADB ready to expand project financing in new spheres
The Asian Development Bank (ADB) is ready to consider the possibility of financing projects in the sphere of agriculture in Azerbaijan, said Nariman Mannapbekov, the head of ADB Baku office.
"The ADB prioritizes the spheres which are of priority for the government. That’s to say, if the Azerbaijani government considers it necessary that we should work for instance, in the sphere of agriculture, we will be ready to consider the relevant projects in this field," he said in an interview with Trend.
Moreover, Mannapbekov pointed out that upon the government’s request, the ADB is ready to offer financing for the development of the secondary specialized education sphere in Azerbaijan and start to work with the country’s Education Ministry.
"We have already prepared a small ground and have provided technical assistance so that the Ministry of Education would develop the skills of building cooperation with ADB and adding a new content to this cooperation," he said.
Talking about the need for a state guarantee for projects financed by ADB, Mannapbekov noted that when issuing loans for private sector projects, the bank does not require a state guarantee.
"As for public funding, basically, the Ministry of Finance acts as a borrower here, so no guarantee is required. But if the borrower is a state company, for example, Azerishig, then a loan agreement is signed with the company and a guarantee agreement is signed with the Ministry of Finance," he added.
ADB was founded in 1966 and has 67 member states. The bank’s headquarters is located in Manila, Philippines. Azerbaijan became an ADB member on Dec.22, 1999. The country accounts for 0.5 percent of the bank’s capital.
The bank’s portfolio in Azerbaijan is $2.8 billion.
Mannapbekov further said that the Bank expects the updated country operations business plan (COBP) on Azerbaijan to be agreed in the country’s government by July 1.
“ADB works out, or updates country operations business plan on a regular basis. We discussed the updated version of the COBP with Azerbaijani government officials and submitted it for consideration,” he said.
Mannapbekov noted that this year, the ADB will primarily focus on preparing the feasibility study for the North-South Transport Corridor project, as well as rendering assistance in deepening structural reforms in the country’s financial sector.
“If the Azerbaijani government requests for ADB assistance, it will be possible to submit the project for financing the North-South Transport Corridor for the approval of the ADB Board of Directors by late 2017,” he added.
The ADB may also consider providing funds for the second phase of the project on development of the largest gas and condensate field Shah Deniz 2 if a request is received from the Azerbaijani government.
Mannapbayov recalled that for the first phase of the Shah Deniz 2 project, ADB approved a loan worth $1 billion, of which $500 million are borrowed funds of the bank.
"The loan, allocated from ADB funds for the Shah Deniz 2 project, is provided through private financing. There are two lines of financing in the ADB: 75-80 percent of funds are allocated through state financing and the rest-private financing, "he said.
He noted that ADB carries out operational activities proceeding from the requests and priorities of the government.
The ADB Board of Directors approved the allocation of a loan for the second phase of the development of the Azerbaijani Shah Deniz gas field on December 7, 2016 within the framework of the Southern Gas Corridor project.
Azerbaijan and ADB signed a guarantee agreement and an agreement on the allocation of a $500 million loan for the Shah Deniz-2 project on May 7, 2017.
Shah Deniz reserves are estimated at 1.2 trillion cubic meters of gas. Within Shah Deniz 2, annual gas production will increase from the current 9 to 16 billion cubic meters of gas. The cost of the second stage of development of the field is estimated at $25 billion. The first gas will be received within the project in 2018 and it will become the main source for the Southern Gas Corridor.
The gas will be exported to Turkey and the European markets through the expansion of the South Caucasus gas pipeline and the construction of the Trans-Anatolian (TANAP) and Trans-Adriatic (TAP) pipelines.