"Bad Mark" for JSC Azersu

The management of JSC Azersu has received a "bad mark" for the weak development of the credits for a number of projects aimed at the reconstruction of water supply and sanitation in the country.

According to the Board meeting of the Accounting Chamber of Azerbaijan, this includes credit and budgetary funds in the framework of two projects: Water Supply and Sewerage System in Small Cities of Azerbaijan (donor - Japan International Cooperation Agency) and Open Communal Infrastructure II (funded by the German bank KfW).

The auditors found that in 5.5 years of implementation there has been mastered only 21.2% of the credit taken under state guarantee, though exceeding the duration of the project leads to increase in the funds allocated by the government to repay the loan.

Established as a fact was payment of funds to the contractors to a greater extent than was originally envisaged due to the inefficient billing system.

The Open Municipal Infrastructure Program II envisages works on modernization of the water and sewage systems of Ganja and Sheki. For its implementation the bank KreditanstaltfurWiederaufbau (KfW) has provided a loan of 37 million euros, and the Swiss State Secretariat for Economic Affairs (SECO) - a grant of 10 million euros. Another 7 million euros was the share of the local government.

The project Water Supply and Sanitation in Small Cities involves the reconstruction of water and sewerage systems in 10 cities and regional centers of Azerbaijan with a combined population of 400,000 people. Under the terms of the loan agreement signed on 29 May 2009, JBIC will provide a loan of 38 billion Japanese yen (US $ 400 million) at 1.4% per annum for 30 years, including a 10-year grace period, for these works.

The Accounting Chamber of Azerbaijan, accountable to the parliament, has been in force since 7 December 2001, as the authority controlling the flow of budgetary funds of Azerbaijan.

Its executives (members of the Bar, which consists of the Chairman, his deputy and seven auditors) are elected every 7 years.

This entity is usually limited to generalities about the Board meeting, without giving specific numbers or data.

According to Article 6.0.3 of the Law of Azerbaijan Republic "On receipt of information" ("Basic principles of information"), the disclosure of information on budget revenues and expenditures is the responsibility of government institutions, including the Accounting Chamber. --17D-