ADB $500 Million Road Funding Facility to Boost Trade, Growth in Azerbaijan

News Release | 4 October 2012

MANILA, PHILIPPINES - A new $500 million Asian Development Bank (ADB) loan for road upgrades along a key transport corridor in Azerbaijan is set to help the Central Asian country expand trade and improve access to services for poor rural communities.

"Right now, much of the country's road network is in bad shape, which leads to long travel times, traffic accidents, and high transportation costs," said Balabhaskara Reddy Bathula, Senior Transport Specialist in ADB. "Upgrades along this vital trading link for Azerbaijan will support growth and job opportunities, as well as make it easier for rural communities to access essential social services."

More than half of Azerbaijan's main road network is in poor condition, with secondary roads even worse off, largely a result of inadequate maintenance and management. Since roads are the country's main mode of transport for freight and passengers, upgrades are a national development priority. Azerbaijan also plays an important transit role connecting the Black Sea with the Caspian Sea, and better road links are crucial for developing both regional and international trade.

The second Road Network Development Investment Program will fund a 63-km section of motorway between Masalli and Shorsulu along a route running from Azerbaijan's border with the Russian Federation down to the border with Iran. The program will also provide training in procurement, project management, and implementation for Ministry of Transport staff.

The program is linked to a pilot project in place to help women entrepreneurs along the project roads scale up businesses, while an information campaign about the links associated with HIV/AIDS, human trafficking, and better connectivity will be carried out.

Funds from ADB's ordinary capital resources will be released in two tranches of $250 million each and will cover about 80% of the total program cost, with the Government of Azerbaijan supplying the balance. The first tranche will finance building a motorway between Masalli and Jalilabad. The program, which is part of the Government's broader $2.6 billion national road network development plan, is expected to run from October 2012 to June 2021.

The new financing builds on an earlier, ongoing ADB road development program which is supporting other critical road improvements, including the rollout of the Masalli-Astara Expressway.