OREANDA-NEWS. December 02, 2009. The EBRD is supporting the diversification of the economy in Azerbaijan with a US120 million loan to Azerbaijan Methanol Company (AzMeCo), reported the press-centre of EBRD.

A cooperation agreement between the EBRD and AzMeCo was signed in Baku at a ceremony attended by the Minister of Economy of Azerbaijan, Shahin Mustafayev, special guest Tony Blair, representatives of Azerbaijan’s government and members of Parliament. The loan documentation is expected to be completed in the coming weeks.

The EBRD loan would be used to finance AzMeCo's construction of a methanol plant in the Karadagh region of Azerbaijan, south of the capital Baku.

This is the first methanol project to be financed by the EBRD, and the Bank’s largest investment to date in a locally-owned company in Azerbaijan.

With total costs of US330 million, the project is co-financed by the International Bank of Azerbaijan. A part of the EBRD loan will be syndicated under the Bank’s A/B structure.

The plant with production capacity of 561,000 tonnes of methanol per year will add value to the Azerbaijan’s important reserves of natural gas by converting country’s natural gas into methanol for export.

In future, AzMeCo plans to diversify the plant’s output, including the production of urea and ammonia.

“The EBRD is pleased to support this important project for Azerbaijan’s industrial sector. The new methanol plant will stimulate the development of petrochemical industry, which will generate more investments and new employment opportunities in the country,” said Kevin Bortz, EBRD Director for Natural Resources.

“The EBRD will continue its cooperation with AzMeCo to support the development of the company, and we are open to examine further financing for the next stages of the project,” added Mr. Bortz.

"After several years of hard work we are happy to celebrate AzMeCo's success reaching this step in raising financing for this milestone transaction. We are proud to be setting standards of corporate governance, transparency and environmental and social responsibility in Azerbaijan's industrial sector and we look forward in the next phase to expanding our plant to include the production of urea and ammonia", said Mr. Nasib Piriev, Chief Executive Officer of AzMeCo.

Since the beginning of its operations in Azerbaijan, the EBRD has committed over US1 billion across more than 90 projects in corporate, financial, infrastructure and energy sectors.