Azerbaijan Awaits IFI Loan Decisions

The World Bank has still not approved a major loan to Azerbaijan for the Southern Gas Corridor (SGC). "The discussions on the loan are under way, they are in advanced stage and the bank may approve funding of SGC in the amount of $500mn by the end of this year," WB’s Baku office told NGW.

According to the bank, the picture will be clearer “next month when SCG’s working program and budget for next year will be defined and approved.”

In June WB said that it could lend Azerbaijan up to $500mn but the bank’s Azerbaijan office announced the possibility of loan guarantees for the TransAnatolian Pipeline section of the SGC which crosses Turkey, through its Multilateral Investment Guarantee Agency (MIGA).

"MIGA could provide its guarantee coverage but its involvement in this scheme and the size of its guarantee coverage are still being discussed," the bank emphasised.

Baku is seeking loans from Asian Development bank and European Bank for Reconstruction and Development too. Azerbaijan had its Extractive Industries Transparency Initiative membership extended October 26 by EITI at its meeting in Astana.

Shah Deniz field, Caspian Sea

(Credit: BP)

The country EITI status has taken on greater significance amid discussions with international financial institution for billions of dollars in loans to fund its share of SGC. It means that Azerbaijan has about 4 month to meet EITI requirements, otherwise it could jeopardise plans to attract funding from international finance institutions.

SGCC has also been considering offering eurobonds by the end of this year or next year if the market is favourable.

Kama Mustafayeva