OREANDA-NEWS. August 21, 2009. For the time being, the Azerbaijani government and Azerenerji OJC (national energy operator) have not a final scheme to  finance construction of  Canub nearby Ali-Bayramli thermal station (capacity: 750 MW), which should be finished in 2010.

Informed sources reported that the  Ministry of Finance called upon the power operator to search new schemes to finance building of this object.

"An issue arose up in connection with that coordinated  gaining loan  of the Islamic Development Bank (IDB) covers incompletely demands for financing the station building. At the same time, the Ministry of Finance did not offer new schemes,” a source said.

The IDB is ready to extend a loan of up to US100 million and the government is ready to raise up to US 200 million of foreign borrowing for Canub construction. In this connection the IDB mission will also compose reps of Saudi Fund for Development of Arab Economy, Kuwaiti Fund, Abu Dhabi Fund and Fund OPEC (OFID). The government hopes that they will manage to organize overall financing for US 200 million.

Earlier, it was planned to finance from State Budget.

At the same time Canub’s capacity has been already increased from 780 MW in compliance with the original plan up to 800 MW versus Shirvan thermal station (750 MW), which it should replace.

Earlier Azerenerji indicated efficiency of the Canub project. Azerenerji vice president Marlen Askerov says that the cost of Canub construction will be less compared to other stations.

“We expect to put this station into operation until the end of 2010,” he said.

Initially commissioning of Canub to operate on both gas and black oil was scheduled for late 2009.

Within the project Azerenerjitikinti LLC signed a contract with General Electric (US) for 4 gas turbines and 4 generators.

American company GE is to implement the contract for 13 months. Canub LLC that was appointed responsible for the turnkey project is to sign contracts with some more known companies for equipment supplies within the turnkey project.

Azerenerji itself failed to raise in time a loan from foreign banks for the station, despite it received the Azerbaijani president’s consent on the occasion). The EUR 300 million loan for 10-year period under governmental guarantee would cover 50% of the project cost.

But the lending banks’ loan proposals had validity for restricted period for which Azerenerji “forgot to sign a loan agreement with them. Now the station can be financed only by Azerbijan State Budget 2009.

In parallel Azerenerji blocked the construction of the first private power station by South Korea’s KEPCO. This private station almost would not cede to Canub on its capacity.