Project Name
Railway Sector Development Program
Project Number
48386-004
Country / Economy
  • Azerbaijan
Project Status
Active
Project Type / Modality of Assistance
  • Loan
  • Technical Assistance
Source of Funding / Amount
Loan 3614-AZE: Railway Sector Development Program
Source Amount
Ordinary capital resources US$ 250.00 million
Loan: Railway Sector Development Program
Source Amount
Agence Francaise de Developpement US$ 75.00 million
TA 9439-AZE: Capacity Development and Reform Support for Railway Sector Development
Source Amount
Technical Assistance Special Fund US$ 1.00 million
Loan 3615-AZE: Railway Sector Development Program
Source Amount
Ordinary capital resources US$ 150.00 million
Loan 8375-AZE: Railway Sector Development Program
Source Amount
Agence Francaise de Developpement US$ 100.00 million
Strategic Agendas
  • Environmentally sustainable growth
  • Inclusive economic growth
  • Regional integration
Drivers of Change
  • Gender Equity and Mainstreaming
  • Governance and capacity development
  • Partnerships
Sector / Subsector
  • Transport / Rail transport (non-urban)

Gender
Some gender elements
Description
The Program will provide project financing for the rehabilitation of the track and structure of the Sumgayit-Yalama rail line--a key link in the North-South Railway Corridor within the Central Asia Regional Economic Cooperation network. It will improve rail network serviceability (the project loan); and support the railway sector development reforms in management autonomy and governance, financial restructuring, reporting and control, operational efficiency, and corporate restructuring (the policy-based loan).
Project Rationale and Linkage to Country/Regional Strategy

A sustained policy implementation effort to engineer a transition towards a less oil-dependent economy is an urgent priority, and railway development can be a crucial enabler of this alternative development path. With railway infrastructure installations in almost all strategic locations of Azerbaijan (border cross points, ports, oil production and agricultural regions), railways competitiveness can be essential to the country's production, trade, and distribution of bulk materials such as agricultural products. But reform challenges in the sector are urgent.

The development problem urgently requires a comprehensive policy and fiscal response from the government that (i) promotes institutional, corporate, financial management and control, and labor and debt-restructuring reforms; and (ii) makes crucial financing available to upgrade ADY's service capacity and/or competitiveness. The emerging railway development challenges require properly sequenced institutional and corporate reform actions to tackle the consequences of years of financial and institutional mismanagement at ADY. These reforms are crucial so that a financially sustainable outlook for investment financing can help tackle the physical constraints to the freight and passenger businesses at ADY. The sector development program modality of the ADB enables multiyear assistance to such a sector-focused reform and investment financing agenda.

The program, included in ADB's country operations business plan for Azerbaijan, 2018-2020, will be ADB's first intervention in Azerbaijan's railways. Dialogue on the program's design and the assistance began in late 2015. The program's multiyear, programmatic policy loan component supports the government reform agenda for the railway sector and the currently-integrated main operator. Its project loan component synergizes infrastructure improvement of Azerbaijan's East-West and North-South railway corridors to maximize the country's transit potential. In addition, since ADY's capacity is significantly stretched by the wide range of immediate challenges, ADB will allocate technical assistance to facilitate policy dialogue and support implementing further change. This will enhance the coordination with development partners, key ADY stakeholders and other policy makers regarding the challenging reform processes.

Impact

Railway development for Azerbaijan economically sustained.

Project Outcome

Description of Outcome

Rail service delivery and financial viability of railway operations in Azerbaijan improved.

Progress Toward Outcome
As of end December 2023, construction progress is: Lot 1 = 69% and Lot 2 = 56%. Approximately 119 km of double track line has been completed or 72%.

Implementation Progress

Description of Project Outputs

Governance, and management and financial autonomy of ADY enhanced.

Financial restructuring of ADY's debt liabilities effectively conducted.

Financial and management control, efficiency and reporting at ADY enhanced.

Operational efficiency enhanced and corporate restructuring effectively conducted.

Infrastructure of the Sumgayit-Yalama rail line improved.

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

Outputs 1-4 pertain to the deliverables for the policy-based loan, which was financially closed in September 2019.

Output 5: As of end December, construction progress is: Lot 1 = 69% and Lot 2 = 56%. Approximately 119 km of double track line has been completed or 72%.

Geographical Location
Baku, Yalama

Safeguard Categories

Environment
B
Involuntary Resettlement
B
Indigenous Peoples
C

Summary of Environmental and Social Aspects

Environmental Aspects
The project loan is classified category B for environmental safeguards. Meaningful public consultations were conducted and an initial environmental examination was prepared in accordance with ADB's Safeguard Policy Statement (2009) and disclosed on ADB's website on 7 November 2017. Project impacts during construction are expected to be site-specific, temporary, and related to the direct replacement of track, such as noise in residential areas, dust and exhaust emissions from equipment, impacts of bridge rehabilitation on the crossing rivers, and waste management. During operations, potential noise and vibration impacts are expected from the increased train speed and frequency after track improvement. The project will improve railway safety by fencing along the whole alignment. An environmental management plan provides mitigation and monitoring measures, as well as a capacity building plan for the PMO and ADY. Contractors will be responsible for implementing the mitigation measures. The loan has allocated funds for institutional strengthening, including safeguard compliance and railway safety improvement. The PMO will ensure the project complies with the environmental loan covenants, including semiannual environmental monitoring reporting. No environmental impact is expected for the policy-based loan.
Involuntary Resettlement
The project loan is classified category B for involuntary resettlement. Meaningful public consultations were conducted and a draft land acquisition and resettlement plan (LARP) was prepared in accordance with ADB's Safeguard Policy Statement (2009) and disclosed on ADB's website on 5 October 2017. The LARP completion report is finalized and disclosed on ADB's website on 29 September 2019. ADY has overall responsibility for LARP finalization and implementation. It has adequate institutional capacity and is committed to managing social safeguard compliance. The construction supervision consultant will monitor LARP implementation. The PMO will ensure the project complies with social safeguards loan covenants, including semiannual social safeguard monitoring reporting. No land acquisition and resettlement impact is expected for the policy-based loan.
Indigenous Peoples
The project loan is classified category C for indigenous peoples.

Stakeholder Communication, Participation, and Consultation

During Project Design
Stakeholders including ADY, government agencies, development partners and local residents were consulted throughout project preparation to minimize adverse impacts and ensure social acceptance. The views and concerns of all stakeholders will be taken into consideration during project implementation.
During Project Implementation
The recent spread of COVID-19 cases, in the country and region, has led to a minimization of physical contact. Therefore, public consultations cannot be conducted. Instead, since 2020, the information dissemination has been done through individual meetings and through local informants, such as municipalities and train station officials. Therefore, it was considered more appropriate to prepare booklets as a source of information to provide information about the project, including GRM details, to local people. An appropriate booklet has been prepared and will soon be distributed to local people along the entire route.

Business Opportunities

Consulting Services
Consulting services to be financed under the ADB loan will be recruited in accordance with ADB's Guidelines on the use of Consultants (2013, as amended from time to time) and ADB''s prior review.
Procurement
All procurement financed under the ADB loan including ADB-administered loan will follow international competitive bidding procedures pursuant to ADB's Procurement Guidelines (2015, as amended from time to time) and ADB''s prior review.

Contact

Responsible ADB Officer
Sluijter, Jurgen
Responsible ADB Department
Sectors Group
Responsible ADB Division
Transport Sector Office (SG-TRA)
Executing Agencies
Ministry of Finance

Timetable

Concept Clearance
04 Jul 2016
Fact Finding
28 Aug 2017 to 08 Sep 2017
MRM
09 Oct 2017
Approval
06 Dec 2017
Last Review Mission
-
Last PDS Update
15 Feb 2024

Funding

Loan 3614-AZE

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
06 Dec 2017 19 Dec 2017 16 Jan 2018 30 Jun 2022 - 30 Sep 2019
Financing Plan
  Total (Amount in US$ million)
Project Cost 325.00
ADB 250.00
Counterpart 75.00
Cofinancing 0.00
Loan Utilization
  Date ADB Others Net Percentage
Cumulative Contract Awards 06 Jun 2024 250.00 0.00 100%
Cumulative Disbursements 06 Jun 2024 250.00 0.00 100%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating Satisfactory Satisfactory Satisfactory Satisfactory - Satisfactory

Loan 3615-AZE

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
06 Dec 2017 19 Dec 2017 16 Jan 2018 30 Jun 2022 31 Dec 2024 -
Financing Plan
  Total (Amount in US$ million)
Project Cost 150.00
ADB 150.00
Counterpart 0.00
Cofinancing 0.00
Loan Utilization
  Date ADB Others Net Percentage
Cumulative Contract Awards 06 Jun 2024 146.69 0.00 98%
Cumulative Disbursements 06 Jun 2024 140.11 0.00 93%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating Satisfactory Satisfactory Satisfactory Satisfactory - Satisfactory

Loan 8375-AZE

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
14 Jun 2018 11 Mar 2019 11 Mar 2019 27 Dec 2023 - 12 Dec 2023
Financing Plan
  Total (Amount in US$ million)
Project Cost 100.00
ADB 0.00
Counterpart 0.00
Cofinancing 100.00
Loan Utilization
  Date ADB Others Net Percentage
Cumulative Contract Awards 06 Jun 2024 0.00 98.17 100%
Cumulative Disbursements 06 Jun 2024 0.00 98.17 100%

TA 9439-AZE

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
06 Dec 2017 28 Dec 2017 28 Dec 2017 31 Dec 2020 - 29 Jan 2021
Financing Plan/TA Utilization
ADB Cofinancing Counterpart Total
Gov Beneficiaries Project Sponsor Others
1,000,000.00 0.00 0.00 0.00 0.00 0.00 1,000,000.00
Cumulative Disbursements
Date Amount
06 Jun 2024 963,315.83
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating Satisfactory Satisfactory Satisfactory Satisfactory - Satisfactory
 
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Source URL: https://www.adb.org/projects/48386-004/main