Azerbaijan: Water Supply and Sanitation Investment Program - Tranche 3

Sovereign Project | 42408-043 Status: Active


ADB is helping Azerbaijan improve water and sanitation services in towns and semi-urban areas surrounding the capital Baku. The third project under the program will improve the water supply and sewerage network in Aghjabedi town, and in the peri-urban areas of Qaracuq, Qarahanbeyli, Bulgan, Haciniyyet, and Tumbul, located south and southwest of Nakhchivan city.

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Project Name Water Supply and Sanitation Investment Program - Tranche 3
Project Number 42408-043
Country Azerbaijan
Project Status Active
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 3079-AZE: MFF-WSS Investment Program Tranche 3
Ordinary capital resources US$ 150.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector

Water and other urban infrastructure and services - Urban sewerage - Urban water supply

Gender Equity and Mainstreaming Effective gender mainstreaming

Project 3 under the Investment Program is divided into two main subprojects benefitting the population of 50,573. The first subproject will improve the water supply and sewerage network in Aghjabedi town, whereas the second subproject will improve the same in peri-urban towns of Nakhchivan, namely , namely Qaracuq, Qarahanbeyli, Bulgan, Haciniyyet and Tumbul, located south and southwest of Nakhchivan city.

The main objectives of the subprojects are to (i) meet the demand for water by increasing the proposed volume at the consumer end to 147 liters per capita per day (lpcd) for domestic consumption and 29.4 lpcd for non-domestic consumption; (ii) increase the abstraction of water from the existing and new sources to meet water demand; (iii) improved water distribution network to provide between 90 to 100% of the households with safe and reliable water supply as compared to 32% in 2011; (iv) reduction of non-revenue water (NRW) to 10% of production through district/bulk metering; hydraulic zoning; leak detection and consumer metering.

Under the Aghjabedi subproject, the investment in infrastructure would include improvement of the water intake facilities, water supply network, sewerage system as well as the administrative infrastructure. Specific activities will include: (i) rehabilitation of two existing bore wells and construction of 8 new bore wells; (ii) rehabilitation of the two existing reservoirs and construction of four new reservoirs; (iii) construction of sewage collecting system, pump stations, and effluent discharge pipelines, (iv) wastewater treatment plant and associated workshop office buildings. Under the Nakhchivan subproject, the construction of only water distribution and sewage collection networks is envisaged for peri-urban towns, as the water treatment plant and sewage treatment plant constructed under Project 1 and Project 2 respectively would also cater to the peri-urban towns of Nakhchivan. Overall, Project 3 includes construction of 266 km of water supply network, 8,000 cubic meters of storage reservoirs, 245 km of sewer lines, and a sewage treatment plant of 20 MLD capacity in Aghjabedi.

Project Rationale and Linkage to Country/Regional Strategy

The quality, coverage and reliability of water supply and sanitation infrastructure and services have not kept pace with the rapid growth of the economy and population of secondary towns in Azerbaijan. The deficiencies are adding to household costs and diminishing the quality of life of all the towns' population. Recognizing the need to overcome the current problems and constraints, the government's State Program on Poverty Reduction and Sustainable Development (SPPRS) for 2008-2015 committed to improve access to basic services and targets improved water supply and sanitation (WSS) coverage and service quality by 2015. This includes 100% coverage with 24-hour water supply in the capital city Baku and 80-85% coverage in Azerbaijan's secondary towns and villages. Sustainable environmental management, good governance and institutional effectiveness are also key strategic goals of the SPPRS.

In response to the Government of Azerbaijan''s request, a framework financing agreement (FFA) for the multi-tranche financing facility MFF 0032: Azerbaijan Water Supply and Sanitation Investment Program (the Investment Program) was signed between the Government and the Asian Development Bank (ADB) on 15 August 2009. The Investment Program aims to address development needs of Azerbaijan's secondary towns through the adoption of a long-term and holistic approach to (i) build institutions, capacities and systems, and improve service delivery, (ii) promote reforms to bring about sustainable WSS service financing; and (iii) support the execution of priority components based upon a detailed sector analysis and the sector roadmap.

On 23 September 2009, ADB's Board of Directors approved the first investment program under the facility, amounting to USD 600 million. The Investment Program's executing agencies (EAs) are the Azersu Joint Stock Company (AZERSU) and the State Amelioration and Water Management Committee (SAWMC). Project 1 of the Investment Program was approved by ADB on 14 October 2009 and Project 2 was approved on 22 December 2011.

Project 3 will improve the access and quality of WSS services in Aghjabedi town and the peri-urban towns of Nakhchivan.

Impact Improved public health and environment in participating towns of Aghjabedi and the peri-urban towns of Nakhchivan City (Qarahanbeyli, Qaracuq, Tumbul, Bulgan and Hacniyyet towns)

Project Outcome

Description of Outcome Improved coverage, and the continuity and quality of water supply and wasterwater disposal in Aghjabedi and the peri-urban towns of Nakhchivan City
Progress Toward Outcome --
Implementation Progress
Description of Project Outputs

A: WSS Infrastructure Rehabilitated and Improved

Water supply and sewerage system efficiency improved through rehabilitation and replacement, and coverage expanded

B. Institutional Effectiveness

Capacity developed for better system planning, operations and maintenance

Status of Implementation Progress (Outputs, Activities, and Issues)

The loan became effective on 28 May 2015. Procurement of works and recruitment for consultancy are ongoing.

The loan became effective on 28 May 2015. Procurement of works and recruitment for consultancy are ongoing.

The loan became effective on 28 May 2015. Procurement of works and recruitment for consultancy are ongoing.

The loan became effective on 28 May 2015. Procurement of works and recruitment for consultancy are ongoing.

The loan became effective on 28 May 2015. Procurement of works and recruitment for consultancy are ongoing.

Geographical Location Aghjabedi and Nakchivan

Safeguard Categories

Environment B
Involuntary Resettlement B
Indigenous Peoples C

Summary of Environmental and Social Aspects

Environmental Aspects AZERSU and SAWMC endorsed the updated Environmental Assessment and Review Framework (EARF) for the Investment Program in November 2011. The environmental assessments conducted for Project 3 comply with the updated framework, which is being posted on ADB website on 21 August 2013. Project 3 is classified B based on the IEEs prepared for each of the two subprojects, as it will not have significant irreversible environmental impacts during or after construction. The contractors are required to refine and implement the environmental management plan prepared in the IEEs, which will also form an integral part of construction contracts.
Involuntary Resettlement AZERSU and SAWMC endorsed the updated Land Acquisition and Resettlement Framework (LARF) for the Investment Program in November 2011. Project 3 includes construction of water supply and sewerage network along existing road network and within the existing right of way. The land for boreholes, water intake, reservoirs and associated facilities in Aghjabedi town is owned by SuKanals and similarly land for the sewage pumping station in Nakhchivan is owned by the government. There is only 3.5 hectare privately land being acquired for construction of sewage treatment plant in Aghjabedi town. A land acquisition and resettlement plan (LARP) was prepared for the project in consultation with the displaced persons and measures to deal with temporary impacts during construction in all subprojects. The LARP was endorsed by AZERSU on 25 June 2013 and is posted on ADB website on 21 August 2013. Consequently, Project 3 is classified B. Any unanticipated impacts will be mitigated, based on the provisions of the LARF. AZERSU, with support from its IPMC, has sufficient institutional capacity for supervising and monitoring the LARP.
Indigenous Peoples The Project will have no expected impact on Indigenous People.
Stakeholder Communication, Participation, and Consultation
During Project Design The Project intends to maximize transparency by communicating relevant project information to stakeholders in various means. Consultations were carried out during the design of the WSS system and gender analysis was conducted to assess the needs and problems of men and women in relation to WSS services, with minimum 50% participation from women. Based on relevant available database on families, the design of the system ensured that maximum households headed by women, widows, the elderly, and single women are covered within the design limitation.
During Project Implementation

The main vehicle for civil society participation in the project is through mobilization of the Town Water User Associations. (TWUAs)

The project will establish links between the two executing agencies, TWUAs, and local Non-Governmental Organizations to ensure community feedback provided by women will be delivered to EAs for improved services.

A public outreach program to create local awareness on environmental and financial sustainability of the services and to keep the public informed of the project implementation schedule will also be conducted in each project area, with relevant information, education and communication (IEC). This activity is outlined in the project Gender Action Plan.

Business Opportunities

Consulting Services Two consulting contracts for project management consultancy and two consulting contracts for project auditing will be bid out for the project by AZERSU and SAWMC.

All procurement of goods and works will be undertaken in accordance with ADB's Procurement Guidelines. Tranche 3 loan includes: (i) two international competitive biddings (ICBs) for procurement of civil works for water supply and sewerage network in Aghjabedi and peri-urban towns in Nakhchivan; (ii) one ICB for procurement of civil works for sewage treatment plant in Aghjabedi.

Bidders eligibility will be determined in accordance with ADB's Procurement Guidelines (March 2013, as amended from time to time). Accordingly, no bidder or potential bidder shall be declared ineligible for ADB financed contracts for any reason other than those set out in ADB's Procurement Guidelines. For goods or services funded by loans from ADB's Special Fund resources, payments are limited to goods produced in, and services supplied by, developed member countries that have contributed to such resources and all developing member countries.

Responsible Staff

Responsible ADB Officer Lu Shen
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Urban Development and Water Division, CWRD
Executing Agencies
State Amelioration & Water Management Committee of Nakhchivan Autonomous Republic
Khatai district, Nakhchivan City
Nakhchivan Autonomous Republic
AzerSu JSC
67, Tbilisi av.
Baku AZ1012, Azerbaijan


Concept Clearance -
Fact Finding -
MRM 04 Sep 2013
Approval -
Last Review Mission -
Last PDS Update 31 Mar 2016

Loan 3079-AZE

Approval Signing Date Effectivity Date Closing
Original Revised Actual
05 Dec 2013 28 Nov 2014 28 May 2015 31 May 2018 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 203.39 Cumulative Contract Awards
ADB 150.00 05 Dec 2013 26.61 0.00 18%
Counterpart 53.39 Cumulative Disbursements
Cofinancing 0.00 05 Dec 2013 15.46 0.00 10%

Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

Evaluation Documents See also: Independent Evaluation

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Related Publications

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