ADB to back its first infra project in Azerbaijan

A loan of €20m will be provided for the setting up of an integrated power plant in the country. The loan marks the first involvement of the Asian Development Bank in a private sector infrastructure project in Central Asia.

Asian Development Bank (ADB) has announced a loan of €20 million for its first-ever involvement in a private sector infrastructure project in the Central Asian region. The money will be used for setting up an integrated cement plant in Azerbaijan in order to expand output and improve fuel efficiency. 

The loan, which has been approved by ADB’s board of directors, will help Garadagh Cement, an open joint stock company, to raise its cement production capacity by 30 percent to 1.7 million tons per year.

“This project represents a key opportunity for ADB to support Azerbaijan’s infrastructure development in a way that increases efficiency and brings valuable energy savings,” said Don Purka, a senior investment specialist in ADB’s private sector operations department, in a statement. “At the same time, it demonstrates the opportunities for foreign direct investment outside the oil and gas industry.”

The project has an estimated total value of €325 million ($400 million) and will be financed by €140 million in senior debt from the European Bank for Reconstruction and Development (EBRD) and ADB; subordinated debt from Switzerland-based cement firm Holcim, the majority shareholder in Garadagh Cement; with remaining finance coming from the cash flows of Garadagh Cement.

The plant, 35 kilometres from the Azerbaijan capital of Baku, will be the only integrated clinker and cement producer in the country. A steering committee of Garadagh Cement and Holcim officials will oversee the project, with China’s CBMI Construction Company, a subsidiary of Sinoma International, contracted to carry out the main part of the investment under a turnkey engineering, procurement, and construction contract.