OREANDA-NEWS. October 31, 2007. The EBRD is providing a $92 million loan to Azerenerji JSC to finance the rehabilitation of the AzDRES thermal power plant, the largest power plant in Azerbaijan with a capacity of 2,400 MW, reported the press-centre of EBRD.

The loan will be used to finance a recently signed contract between the state-owned power utility Azerenerji and China National Electric Equipment Corporation (CNEEC) to improve the plant’s reliability, efficiency, health and safety conditions and to reduce carbon dioxide emissions. The financing complements an initial $115 million loan by the EBRD 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 for Clean Development Mechanism. It is estimated that AzDRES’ carbon dioxide emissions can be reduced by 8.2 million tonnes by 2012 thus allowing the company to qualify for carbon credits which would provide an additional source of income.

The AzDRES thermal power plant consists of 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. This has strong repercussions as AzDRES is providing half the country’s electricity generation and demand is increasing strongly thanks to a rapidly growing economy.

Varel Freeman, EBRD First Vice President, said the loan will ensure the implementation of energy sector reform leading to greater transparency and efficiency. Together with the increased output of AzDRES after the implementation of the rehabilitation programme, Azerbaijan will significantly improve its energy security and reduce carbon dioxide emissions.

The EBRD has been working in the power sector of Azerbaijan since 1994 through financing the hydropower plant Yenikend, completed in 2000, and Mingechaur, completed in 2003. The loan to Azerernerji is supported by technical cooperation grants from the US Trade Development Agency and the EBRD’s donor-sponsored ETC Fund.