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ADB Grant Supporting Azerbaijan's Renewable Energy Development

BAKU, AZERBAIJAN (26 May 2006) - The Asian Development Bank (ADB) and the Government of Azerbaijan today signed a grant agreement for a US$900,000 technical assistance project to assess the potential and options for renewable energy development in the country.

The project, supported by the Government of Finland, will develop an action plan to boost renewable energy development and design pilot projects for the most appropriate renewable energy options.

"Renewable energy sources is key to reducing poverty further in Azerbaijan, as it drives production, increases incomes, and creates new jobs," says Philip Chang, ADB's Country Economist in Azerbaijan.

The energy sector plays a central role in Azerbaijan's economy, contributing about one third of GDP. Although Azerbaijan has been successful in engaging the private sector in the development and export of oil and gas, the domestic energy sector is in urgent need of investment to upgrade aging infrastructure and expand energy supply, especially in the rural and remote areas. Some regions of the country can barely meet basic energy needs, while unreliable electricity supply is constraining economic growth and limiting job opportunities.

"Developing alternative and renewable energy sources, mainly small hydropower and wind power, will be a competitive and environmentally friendly option to meet power shortages," Mr. Chang adds.

The Government of Finland is contributing a grant of $200,000 toward the project's total cost, while ADB is providing $500,000. The Government will provide $200,000 through in-kind contribution. The Ministry of Industry and Energy is the executing agency for the project, which will be carried out over 10 months.

Visit www.adb.org/azrm to know more about ADB-assisted projects and programs in Azerbaijan. See also TA paper at http://www.adb.org/Documents/TARs/AZE/39622-AZE-TAR.pdf

ADB, based in Manila, is dedicated to reducing poverty in the Asia and Pacific region through pro-poor sustainable economic growth, social development, and good governance. Established in 1966, it is owned by 65 members - 47 from the region. In 2005, it approved loans and grants for projects totaling $6.95 billion, and technical assistance amounting to $198.8 million.