What will reform in electric energy sector of Azerbaijan lead to?

On June 22, 2016 Board of Directors of the Asian Development Bank (ADB) will consider providing of the first tranche of credit to improve power distribution system in Azerbaijan, Nariman Mannapbekov, head of ADB representation in Azerbaijan, told journalists.

He said the size of the first tranche will be $250 million. These funds will be spent for purchase and installation of required equipment on the sub-stations and purchase of the meters for the population.

“The credit will be allocated for the period of 25 years with five year grace period. The interest rate will be based on six-month Libor with a very low margin – approximately 0.4%. But these conditions will depend on the choice of the government,” Mannapbekov said.

He said the project will cover all Azerbaijani regions, except for Baku.

In May 2015 Azerbaijan and ADB signed the memorandum of mutual understanding on the investment program to the amount of one billion US dollars, which envisage upgrade of the energy system of the country.

According to the draft of the investment program, ADB will allocate $750 million in three tranches ($250 million each) and the remaining $250 million will be allocated by the Azerbaijani government.

The allocated funds are planned to be used for upgrade of the electric distribution network, sub-stations, improvement of services provided to the clients, replacement of the meters by the digital ones and hiring new staff for Azerishig.

Reforms in the energy distribution networks of Azerbaijan will reduce technical losses, which will lead to saving of natural gas, consumption of which has been growing every year.—0—