The Asian Development Bank (ADB) has already started preparing the new Country Partnership Strategy (CPS) for Azerbaijan for 2024-2028, Candice McDeigan, ADB Country Director in Azerbaijan, told.
"The current CPS will come to an end this year. The upcoming CPS will be aligned with ADB’s Strategy 2030 and Azerbaijan 2030: National Priorities of the Social Economic Development," she said.
McDeigan pointed out that transport sector remains one of the leading fields for ADB-financing in Azerbaijan. As of today, ADB has provided almost $5.5 billion in total for Azerbaijan's transport sector development, which is about 27 percent of the total bank's financing in the country.
"We recently completed 2 road projects under the $500 million second road network development investment program. Under the program, a 60-kilometers long segment of the new Alat-Astara highway was constructed, 70-kilometer long R32 Ujar–Zardab–Agjabedi road and 55-kilometer segment of M5 road from Yevlakh to Sheki were overhauled, and also - 10 local roads with a combined length of 62 kilometers were overhauled," she said. At present, ADB is financing a railway project named Railway Sector Development Program with $400 million that comprises a policy-based loan of $250 million, and a project loan of $150 million.
"This program is improving rail service delivery and the financial viability of railway operations in Azerbaijan. The policy-based loan backed Azerbaijani railway sector development reforms. The project loan is being used to finance the overhaul of approximately 166-kilometer long Sumgait-Yalama double track rail line. The project is scheduled to be completed by the end of 2024," she explained.
The ADB has also approved a small-scale knowledge support technical assistance amounting to $225,000 in November 2022 to assist Azerbaijan Railways Company (ADY) in developing a rail transit operational plan, and to determine the optimal number of locomotive depots, their functionality, and geographical location to increase ADY’s operational performance. The implementation of this project is scheduled for the current year.
"In line with the Government’s priorities, we are ready to provide further assistance to increase the transit capacity of major transport corridors, which could boost regional cooperation and sustainable trade beyond Caucasus," she said. Further speaking, the country director noted that ADB continues to support Azerbaijan's private sector through various initiatives.
"In 2022, ADB partnered with the Ministry of Economy to launch a technical assistance project with a $1.2 million grant to support the Government’s Public-Private Partnership (PPP) agenda and increase private sector involvement in infrastructure projects," she said, adding that this technical assistance has built the capacity of concerned government agencies and helped develop legislative enactments.
Meanwhile, in the financial sector, the ADB continued to support the development of the Microfinance Strategy and Financial Inclusion Framework in the country. "We also partnered with the Central Bank of Azerbaijan to improve consumer protection principles. Last year, we partnered with the Ministry of Finance and the Public Debt Management Agency to enhance debt management capacity and update the Medium- and Long-Term Debt Management Strategy.
We provided policy recommendations to strengthen fiscal debt management practices during crises to improve social services, mandatory health insurance, and healthcare service delivery," McDeigan explained. In addition, as ADB country director pointed out, under the Integrated Fiduciary Risk Assessments and Strengthening Country Systems technical assistance, the bank supported the State Service for Antimonopoly and Consumer Market Control in reviewing the draft new public procurement laws and provided recommendations for further improvement.
Moreover, according to McDeigan, ADB's Modernizing Vocational Education and Training (VET) for Economic Diversification Sector Development Program in Azerbaijan is scheduled for approval in the first half of 2023. In 2022, ADB approved a technical assistance grant of $750,000 to prepare the Modernizing VET for Economic Diversification Sector Development Program.
"The proposed VET Program aims to support the government’s efforts to diversify Azerbaijan’s economy by improving the responsiveness of vocational education and training to the country’s labor market and the 4th Industrial Revolution," she said. As the country director explained, the program comprises a policy-based loan of $120 million, and a project loan of $30 million. This will help to improve VET financing ad inclusiveness, enhance VET quality and relevance, and strengthen the institutional framework of the VET system.
Among other significant projects in the ADB-Azerbaijan cooperation, McDeigan mentioned the project of floating solar power plant with a capacity of 100 kW (95 kW offshore, 5 kW onshore) implemented by the bank on the Boyukshor lake. According to her, the project is expected to be completed in April 2023. "We are currently implementing a pilot project for the installation of floating solar panels on the Boyukshor lake, that will generate 100 KW. The ADB will consider upscaling, if this pilot project promises further opportunities," she added. McDeigan also noted that ADB has supported a number of successful projects in Azerbaijan’s energy sector, and is committed to supporting the Government’s renewable energy agenda.
"The ADB recently approved a $21.4 million solar power project which is the first significant private sector renewable energy investment in Azerbaijan’s history. Under the project, Masdar Azerbaijan Energy LLC will set up a 230-megawatt solar power facility near the Alat settlement in Azerbaijan," she said.
Another project that the country director focused on was the Irrigation and Drainage System Development Project in Azerbaijan's Nakhchivan Autonomous Republic. The bank has provided a $1.2 million technical assistance grant for the preparation.
"The project design is at its final stage and is scheduled for approval in 2023," she said. According to McDeigan, the project will support the use of high-level technology for the rehabilitation and modernization of five irrigation systems in Nakhchivan.
"It is expected to provide irrigation water to more than 43,000 hectares of farmland in five districts of Nakhchivan Autonomous Republic (Sadarak, Sharur, Kengerli, Babek, and Julfa), accounting for about 80 percent of the total irrigated land in the republic," she explained.
In conclusion, Candice McDeigan noted that, following the preparation of a new country strategy for Azerbaijan, ADB's special focus over the next five years will be on green economic transformation, regional cooperation and connectivity, domestic integration, sustainable finance, and private sector development.
"Transport, energy, and social sectors will remain among the core sectors for ADB’s assistance during that period. We are aiming for the new CPS to be approved in the first quarter of 2024 and we will continue to build on the fruitful partnership between ADB and all our partners in the country," she said.