World Bank and Azerbaijan Sign Agreements to Finance Upgrade of a Major Highway

August 11, 2010

Baku, August 11, 2010  – Today, the World Bank and Government of the Republic of Azerbaijan signed the Financing and Loan Agreements for a US$ 70 million equivalent IDA Credit and a US$ 171.6 million IBRD Loan to the Republic of Azerbaijan for the Third Highway Project. The Agreements were signed by the World Bank Country Manager for Azerbaijan Mr. Joseph Owen and Minister of Transport Mr. Ziya Mammadov.

This Project will improve safety and efficiency of the Baku – Shamakhi road by upgrading it from two to four lanes, and will strengthen management of the nascent motorway network.

The Project will help provide better transport services in mountainous central and northern regions of Azerbaijan, which have considerable potential for tourism and industrial production. This section of the road also constitutes part of the shortest route to the Georgian border, and will connect metropolitan Baku area with major agricultural producers in the west of Azerbaijan. In addition to upgrading the Baku – Shamakhi road, the project will help the government establish a framework to develop and manage the motorway network which includes modern financing scheme and maintenance practices for motorways.  

“Located at the crossroads between Europe and Asia and North and South, Azerbaijan has a unique opportunity to serve as a transit hub for flows of energy and goods in the region. To use this opportunity, the country needs to improve its transport infrastructure”, said Joseph Owen, World Bank Country Manager for Azerbaijan, in his remark at the signing ceremony, “Improving the roads and infrastructure is also seen as an important way to reduce poverty and stimulate non-oil development in the country by improving access to markets for the rural population, and encouraging regional development, trade and transit”.

With this project, the World Bank starts the third phase of its assistance to Azerbaijan’s road sector. This phase will use a two-fold approach, one focusing on Azerbaijan’s motorway network and transport corridors, and another focusing on secondary, local roads as part of the regional development strategy.

The Third Highway Project has three components:
Motorway Improvement component will support upgrading a 100 km section of the existing two lane Baku-Shamakhi road into a four-lane motorway and related road safety activities.

Institutional development component will support (a) a study to explore options for management and financing, and efficient allocation of resources for Azerbaijan’s motorways; and (b) institutional development of the Azerbaijan’s road administration in motorway operation and maintenance.

Project Management component will finance consultant services, equipment and technical assistance to support the capacity of the project implementation unit.
Azerbaijan joined the World Bank in 1992. Since then, commitments to the country have reached approximately US$ 2.16 billion for 42 projects.