Azerbaijan : Railway Sector Development Program
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 Details
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Project Officer
Sluijter, Jurgen
Central and West Asia Department
Request for information -
Country/Economy
Azerbaijan -
Modality
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Sector
- Transport
Related Projects
| Project Name | Railway Sector Development Program | ||||||||||||||||||||
| Project Number | 48386-004 | ||||||||||||||||||||
| Country / Economy | Azerbaijan |
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| Project Status | Active | ||||||||||||||||||||
| Project Type / Modality of Assistance | Loan Technical Assistance |
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| Source of Funding / Amount |
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| Strategic Agendas | Environmentally sustainable growth Inclusive economic growth Regional integration |
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| Drivers of Change | Gender Equity and Mainstreaming Governance and capacity development Partnerships |
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| Sector / Subsector | Transport / Rail transport (non-urban) |
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| 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 | 2019: All planned contracts awarded in 2019.??2020: Travel restrictions due to COVID-19 limited the full mobilization of the contractor and CSC; adjustments in the work schedule agreed with contractors and consultants. Geopolitical instability (Sep-Nov), shift of government focus to reclaimed territories and the resulting institutional changes also slowed down project implementation activities.??Q1-Q3 2021: Final total contract cost have been defined after completion of detailed design (being part of the contract). Construction preparations are on track. Detailed implementation schedule is being updated in cooperation with ADY. Delay caused by the pandemic seems to be minor, pending updated work program.??MTR virtual mission completed on 1 May-4 June 2021. Awaiting government decision on the final project design and cost, and the revised financing plan. In-country review mission scheduled on end Sep to early Oct 2021. |
| 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) | Activities for Outputs 1-4 (program component) completed. On 7 August 2020, the Azerbaijan 0nvestment Holding agency was established; on 30 March 2021, the Supervisory Board of ADY was established. Follow-on actions by ADY are ongoing.????Ongoing activities for Output 5 (project component).????TA 9439-AZE financially closed on 29 January 2021. |
| 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 | |
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| 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. |
| Responsible ADB Officer | Sluijter, Jurgen |
| Responsible ADB Department | Central and West Asia Department |
| Responsible ADB Division | Transport and Communications Division, CWRD |
| 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 | 22 Sep 2021 |
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 | Loan Utilization | ||||
|---|---|---|---|---|---|
| Total (Amount in US$ million) | Date | ADB | Others | Net Percentage | |
| Project Cost | 325.00 | Cumulative Contract Awards | |||
| ADB | 250.00 | 08 May 2023 | 250.00 | 0.00 | 100% |
| Counterpart | 75.00 | Cumulative Disbursements | |||
| Cofinancing | 0.00 | 08 May 2023 | 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 | Loan Utilization | ||||
|---|---|---|---|---|---|
| Total (Amount in US$ million) | Date | ADB | Others | Net Percentage | |
| Project Cost | 150.00 | Cumulative Contract Awards | |||
| ADB | 150.00 | 08 May 2023 | 143.67 | 0.00 | 96% |
| Counterpart | 0.00 | Cumulative Disbursements | |||
| Cofinancing | 0.00 | 08 May 2023 | 98.93 | 0.00 | 66% |
| 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 | - | - |
| Financing Plan | Loan Utilization | ||||
|---|---|---|---|---|---|
| Total (Amount in US$ million) | Date | ADB | Others | Net Percentage | |
| Project Cost | 100.00 | Cumulative Contract Awards | |||
| ADB | 0.00 | 08 May 2023 | 0.00 | 100.34 | 97% |
| Counterpart | 0.00 | Cumulative Disbursements | |||
| Cofinancing | 100.00 | 08 May 2023 | 0.00 | 75.72 | 73% |
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 | Cumulative Disbursements | |||||||
|---|---|---|---|---|---|---|---|---|
| ADB | Cofinancing | Counterpart | Total | Date | Amount | |||
| Gov | Beneficiaries | Project Sponsor | Others | |||||
| 1,000,000.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 1,000,000.00 | 08 May 2023 | 963,315.83 |
| Status of Covenants | ||||||
|---|---|---|---|---|---|---|
| Category | Sector | Safeguards | Social | Financial | Economic | Others |
| Rating | Satisfactory | Satisfactory | Satisfactory | Satisfactory | - | Satisfactory |
Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.
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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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ADB Approves $400 Million to Support Azerbaijan's Rail Sector, Modernize North-South Railway Corridor
ADB's Board of Directors has approved two loans totaling $400 million to help strengthen Azerbaijan’s railway sector and modernize and rehabilitate the Sumgayit-Yalama rail line, a key link in the North-South Railway Corridor.
Tenders
Contracts Awarded
| Contract Title | Approval Number | Contract Date | Contractor | Address | Executing Agency | Total Contract Amount (US$) | Contract Amount Financed by ADB (US$) |
|---|---|---|---|---|---|---|
| DESIGN,SUPPLY AND INSTALLATION WORKS FOR RAIL TRACK REHABILITATION (INCLUDING STRUCTURES) OF YALAMA-SUMGAIT LINE LOT 1 | Loan 3615 | 10 Dec 2019 | KOLIN INSHAT TURIZM SANAYI VE TICARET A.S & | HORASAN SOKAK NO.14 GOP 06700 ANKARA, TURKEY TURKEY | Azerbaijan Railways Closed Joint Stock Company | 158,204,527.01 | 57,669,448.48 |
| DESIGN,SUPPLY AND INSTALLATION WORKS FOR RAIL TRACK REHABILITATION (INCLUDING STRUCTURES) OF YALAMA-SUMGAIT LINE LOT 2 | Loan 3615 | 10 Dec 2019 | KOLIN INSHAAT TURIZM SANAYI VE TICARET A.S& | HORASAN SOKAK NO.14 GOP 06700 ANKARA, TURKEY TURKEY | Azerbaijan Railways Closed Joint Stock Company | 158,622,892.21 | 57,669,448.81 |
| PROJECT IMPLEMENTATION SUPPORT | Loan 3615 | 02 Aug 2019 | MALCOLM GERARD OWENS | 5/10-12 BEN BOYD ROAD,NEUTRAL BAY NSW 2089, AUSTRALIA AUSTRALIA | Azerbaijan Railways Closed Joint Stock Company | 704,000.00 | 704,000.00 |
| ENGINEERING AND CONSTRUCTION SUPERVISION FOR REHABILITTATION OF RAILWAY TRACK ALONG YALAMA-SUMGAIT LINE | Loan 3615 | 11 Oct 2019 | JV KOCKS CONSULT GMBH AND SSF INGENIEURE AG | STEGENMANNSTR. 32-38, 56068 KOBLENZ GERMANY GERMANY | Azerbaijan Railways Closed Joint Stock Company | 9,704,308.34 | 9,704,306.88 |
Procurement Plan
| Title | Document Type | Document Date |
|---|---|---|
| Railway Sector Development Program: Procurement Plan | Procurement Plans | Jul 2021 |