OREANDA-NEWS. April 28, 2010. The Company reports that negotiations with commercial banks about project financing have been completed.

“We have defined both volumes and conditions of financing. The whole documentation was transferred to the Asian Development Bank (ADB) to be guarantor on commercial financing. Currently the documentation is under consideration by the Bank for its submission for approval by the Board of Directors,” Azerenerji said.

Certain delay of project consideration in the ADB can be linked not only with the fact that it will be the first experience of guaranteed coverage by ADB in Azerbaijan, but also with change of the head of the ADB Department for Operations in Private Sector & Co-Financing.

ADB representative on the project Kleo Kavasaki conducted project consultations on the matter of guarantees until 20 February.

During negotiations the parties discussed the results of negotiations with commercial banks, the list of banks, their conditions, the order and terms of guarantee submission under commercial financing.

Earlier the Azerbaijani government empowered the Ministry of Finance and Azerenerji for negotiations with ADB about guarantees during commercial financing of the project.

Commercial borrowing will cover the balance of the demanded financing above the 134 million euro loan of the Islamic Development Bank (IDB), a loan agreement with which was signed and endorsed, and expected loans of Fund OPEC (OFID) for USD20 million and Abu Dhabi Fund for USD 40 million.

Besides IDB, the World Bank Group (WBG), the ADB and Arab countries’ funds – the Abu Dhabi Fund for Development (ADFD), the OPEC Fund for International Development (OFID), and the Kuwaiti Fund for Arab Economic Development (KFAED) claimed for financing the project in 2010.

The ADB guarantee support is a pilot project of private sector support for both the ADB itself and other banks with rating of no less than AAA.

Guarantee support for Azerenerji OJSC (Azerbaijan State Electric Company) is going to be the first experience of such kind for the ADB in the region of the South Caucasus.

The guarantees given by the ADB without governmental guarantee will allow Azerenerji to raise finances for its station project under rates to be less than even if the Company received guarantees of the Azerbaijani government. Another advantage for Azerenerji is a fact that guarantees relate to extrabudgetary commitments, i.e they will not tell on Azerenerji’s balance and its credit burden.

ADB scheduled approval of Guarantee Support Project on Canub the third week of December 2009. Guarantee support is estimated at USD 124 million as ordinary credit resources of the bank.

Canub station will have generating capacity of 760 MW and its average efficiency will make up 42%.