The European Bank for Reconstruction and Development (EBRD) is ready to approve 40 to 50 million U.S. dollars in loan to Barmek Azerbaycan, the operator of the Baku and Sumgayit Electricity Networks, if the borrower presents state guarantees.
"No one is willing to give Azerbaijan a loan, which doesn't bear state guarantee," Barmek Azerbaycan President Hussein Arabul said on June 29.
Meanwhile, Azerbaijan's balance of accounts for Q1 2005 has revealed another reality: up to 80 per cent of the borrowings have been drawn without state guarantee.
Barnek has been long blamed for poor management and inefficient finances.
"Instead of obtaining a credit under state guarantee, it would be more efficient to enjoy borrowings from the Surplus Fund of Azerbaijan. The accumulations of the Fund presently yield 2-3 per cent per annum, while the State can benefit by a 6-per cent rate [if it lends companies like Barmek]," Arabul noted.
Nonetheless, according to Arabul, Barmek hasn't given up talks with the EBRD. "The talks are underway, and we seek for a loan to be recoverable within 7 to 8 years. In accordance with our calculations, a project on the expansion of electricity networks requires 40 to 50 million U.S. dollars within the next three years," Arabul said.
Barmek is planning to spend the borrowed capital on the expansion of electricity distribution networks, as well as completion of the Bamek Azarbaycan Elektromexaniksanaye plant (facility to produce electrical equipment for electricity operations) and construction of several hydroelectric electric power plants. According to Arabul, the European Bank for Reconstruction and Development is ready to lend 5 million U.S. dollars to complete the construction of the Bamek Azarbaycan Elektromexaniksanaye plant, with the following commissioning of the facility.
"So far we have coordinated all major issues of the project. The upcoming loan will be given without state guarantee, and be spent on acquiring and assembling necessary equipment and installations," Arabul conclude