A loan agreement has been signed between the Azerbaijani government and the World Bank within the framework of the Project for Expanding the Use of Renewable Energy Sources in Azerbaijan.

EDnews reports, that two documents were approved at the signing ceremony - a loan agreement between AzerEnergy OJSC and the International Bank for Reconstruction and Development (IBRD), a member of the World Bank Group; a guarantee agreement between the Republic of Azerbaijan and IBRD.

The loan agreement, worth 173.5 million, was signed by Baba Rzayev, Chairman of Azerenerji OJSC, and Stefanie Stallmeister, the Country Manager for the World Bank in Azerbaijan. The guarantee agreement was signed on behalf of the Azerbaijani government by Minister of Finance Sahil Babayev and Stefanie Stallmeister.

The loan will be used to strengthen the transmission infrastructure to ensure the safe and sustainable integration of energy from renewable energy plants under construction in Azerbaijan into the national energy system.

The loan is provided on a 15-year term with a 5-year grace period and is expected to be fully repaid by the end of 2039. The Azerbaijani government's share in the project is $31.2 million, which will be used mainly to pay VAT and customs duties.

The main objective of the project, which has a 4-year implementation period, is to increase the efficiency of Azerenerji's energy system and support the safe integration of renewables into the electricity transmission grid over the next 5 years.

The components to be financed by the World Bank include the construction of four new 500 kV and 330 kV transmission lines with a length of 341 km, as well as the purchase of transformers and related equipment for the 500/330/10 kV Navahi substation.