ADB TO EXTEND $500 MILLION TO ARMENIA TO CONSTRUCT NORTH-SOUTH CORRIDOR
/PanARMENIAN.Net/
01.10.2009 16:10 GMT+04:00
/PanARMENIAN.Net/ The Asian Development Bank (ADB) will extend up to
$500 million to Armenia to upgrade its main corridor road as part of
a broader thrust to improve connectivity, and boost trade, growth and
livelihood opportunities in the Caucasus and Central Asia subregions.
The ADB Board of Directors today approved funding for the North-South
Road Corridor Investment Program. Funds will be released periodically
through a multitranche financing facility, with an initial loan of $60
million earmarked to reconstruct an 18 kilometer section of the road
corridor between the capital city Yerevan, and Ashtarak to the north,
and improve safety of Yerevan to Ararat road to the south. The total
investment cost for the seven-year program is $962 million, with the
Government and other development partners providing $462 million.
The Caucasus connects Central Asia to Europe and is a major transit
route for crude oil and other exports from Central Asia. The potential
for turning the Caucasus into a business and logistics hub is now
well recognized, and a number of investment programs, supported by
ADB, are planned or underway to upgrade transport systems in both
subregions. In the case of Armenia, the focus is on upgrading the
Agarak-Kapan-Yerevan-Bavra road which links with Georgia’s southern
corridor, providing a connection to the Black Sea ports of Poti and
Batumi, key shipment points for Central Asia’s exports.
Many of the road and rail systems around the region were built during
the Soviet era and are now in poor condition because of a lack of
maintenance and sharp increases in traffic. Along with physical
upgrades, including border facilities, the programs in Armenia and
elsewhere will strengthen institutions responsible for planning,
operating and maintaining roads, and improve road safety standards,
amidst a rise in serious road accidents.
"Rehabilitating the road network is a top priority for Armenia as it e
trade, investment flows, and jobs, while aiding regional cooperation
and integration and increasing the country’s competitiveness," said
Rustam Ishenaliev, Transport Specialist for ADB’s Central and West
Asia Department.
Among the key beneficiaries will be poor rural communities, including
three million people who live in six provinces which the corridor road
traverses. Armenia has a number of historic tourist sites dating back
to the fourth and fifth centuries that attract visitors from around
the world, and this sector is also likely to gain.
The multitranche financing facility provides major advantages to
both Armenia and ADB as it provides a long-term financing platform
that offers more flexibility and continuity than other modes of
financing. In addition, program features such as advance contracting
and retroactive financing for works and consulting services will help
speed up project implementation.
For the first tranche, ADB’s loan from its concessional Asian
Development Fund will cover 86% of the total cost of $70 million,
with the government providing the balance of $10 million. The loan
has a 32-year term with an 8-year grace period carrying a 1% per annum
interest charge, rising to 1.5% for the remainder of the period. The
Ministry of Transport and Communication is the executing agency for
the program, which is due for completion by December 2016.