azerbaijan case studies

Signed projects

Board approval is the final stage in the project approval process. After Board approval, the EBRD and the client sign the deal and it becomes legally binding. Signed project lists reflect year-end data.

Signed projects  (0.1Mb)

Case studies

Improving the efficiency of Azerbaijan’s largest power plant

AzDRES thermal power plant, with a capacity of 2,400 MW, is benefiting from EBRD finance of US$ 92 million. The loan is improving the plant’s reliability, efficiency, health and safety conditions and helping to reduce carbon dioxide emissions. The AzDRES thermal power plant has eight dual fuel, gas and heavy fuel oil units of 300 MW each. The plant is currently operating below its possible capacity and efficiency levels.

The EBRD investment complements an earlier US$ 115 million loan by the Bank signed in November 2006. The sovereign-guaranteed new loan addresses the reform of the energy sector to which Azerbaijan has committed itself in close cooperation with international financial institutions.

The EBRD finance pursues a number of challenging objectives such as tariff regulation, financial reporting and qualification under the Kyoto Protocol’s Clean Development Mechanism. It is estimated that AzDRES’s CO2 emissions can be reduced by 8.2 million tonnes by 2012 thus allowing the company to qualify for carbon credits and providing an additional source of income. When coupled with the anticipated increased output of AzDRES after the implementation of the rehabilitation programme, Azerbaijan will significantly improve its energy security and reduce CO2 emissions.

Transforming the power sector in Azerbaijan - Sustainability Report 2006

The EBRD is lending €87 million to Azerenergy to modernise the Azerbaijan Thermal Power Plant (TPP), the country’s largest power plant. It supplies most of the electricity for Azerbaijan and the surrounding region. The plant has a capacity of 2,400 MW achieved from eight dual fuel, gas and heavy fuel oil units of 300 MW each but is currently operating below its potential capacity and efficiency levels. This has significant repercussions as Azerbaijan TPP provides half of the country’s electricity generation, and demand is increasing strongly thanks to a fast-growing economy.

The EBRD’s loan will mostly be used to upgrade existing boilers and to install new boilers, which will improve the plant’s reliability, energy efficiency, and health and safety conditions. It will also reduce carbon dioxide emissions. The introduction of fuel-switching technologies as well as energy efficiency improvements at the plant are expected to achieve savings of 2 million tonnes of CO2 a year, equivalent to the energy consumption of around 330,000 homes in the United Kingdom. The total reduction of carbon dioxide
emissions is estimated at 8.2 million tonnes between 2006 and 2012. This would allow the company to qualify for carbon credits, which would provide it with an additional source of income. The project will contribute to the long-term financial viability of the electricity sector in Azerbaijan, which is currently heavily subsidised.

Backing a commercial bank - Annual Report 2007

Iskenderov Shahin is an Azerbaijani businessman who casts his net wide. He produces pomegranate juice, runs a poultry farm, makes flour and owns a chain of fuel stations. He is also one of many Azeris who have made use of the small and medium-sized loans provided by Unibank, Azerbaijan’s leading private independent commercial bank. He borrowed €102,000 to install freezers at the poultry plant and to import Russian bottles for the juice business.

Unibank has been able to help local businesses this way thanks to support from the EBRD. This support continued in 2007 by way of a €24 million loan to promote further competition in the country’s banking sector, where state-owned banks once virtually monopolised the market.

The EBRD loan, which was increased to €24 million from €20 million to meet market demand, will send a strong positive signal to the Azeri banking sector (which grew by 75 per cent in 2006) and help to attract more foreign investment and new local customers by enabling Unibank to offer a diverse product range, regional representation and, perhaps most importantly, a strong service culture.

Unibank intends to expand its branches from five – three in Baku and one each in Ganja in the west and Sumgait in the north-east – to 21 by 2009. It will continue to make small and medium-sized loans to local businesses and individuals and to widen its cooperation with international financial institutions (IFIs). It will also continue to lead the market with its range of products, including credit and debit cards and electronic banking.

At present, Unibank is the only Azeri bank to be a member of the American Chamber of Commerce and, with the help of EBRD technical assistance, the Board of Directors has adopted regulations to bring the bank into line with international standards.

The EBRD has a long history with Unibank and has helped build the bank’s reputation as an innovator in the local banking sector, bringing it up from being the sixth largest Azeri bank in 2003 to one of the largest today. This was done with equity and debt funding as well as technical assistance programmes. The EBRD is a 15 per cent shareholder in Unibank.

“The asset and credit portfolio of the bank has doubled this year, while customer deposits have more than trebled and net profits have grown 2.4 times,” says Faig Huseynov, Chairman of the Executive Board. “This impressive growth resulted in Unibank’s becoming one of the top three biggest commercial banks in Azerbaijan.” “Having been the first Azeri private bank to attract a syndicated loan from an IFI in April 2005,” he went on, “Unibank is delighted to continue its development by signing already its third loan agreement with the EBRD. This signifies the solid trust of the international banking community in Unibank.”