Loan No. 2437-AZE: Power Transmission Enhancement Project

1.    The Republic of Azerbaijan has applied for a loan from the Asian Development Bank (ADB).

2.    The Project was developed following technical, economic, and financial studies that have taken into consideration environmental and social aspects. The Project will construct a double circuit 220 kV transmission line with a total length of 280 km between Mingechevir hydropower plant and the 500/330/220 kV Absheron substation to replace the existing 220 kV transmission lines. It will also construct a 220/110 kV substation at Agdash and expand Absheron substation. The new 220 kV transmission line will be built at the same corridor of the existing old lines, and the latter lines will be demolished before and during the construction of new lines. The existing power supply will be shifted to other transmission lines and the deficient parts will be supplied from increase of imported power.

3.    The Project aims to facilitate the country's economic development by strengthening infrastructure development, removing the bottleneck of power transmission, and improving the efficiency of services. The project impacts are to improve the power transmission system to provide reliable and adequate electricity for sustained economic growth. It will strengthen the backbone power transmission network in the west-to-east direction, which is crucial for ensuring the required stability of power supply to consumers in the key Azeri industrial and economic hub. The Project is an integral part of Azerbaijan's power sector development strategy.

4.    The project outcome will be an expanded and strengthened backbone 220 kV power transmission and distribution network with transmission bottlenecks removed and losses reduced.

Outputs

5.    The outputs of the Project are summarized below:

220 kV transmission line. Construction of 220 kV double-circuit transmission line from Mingechevir hydropower plant to Absheron substation with a total length of about 280 km. The new transmission line will increase the transmission capacity by 300 MW, remove the bottlenecks of backbone transmission network, and reduce the transmission losses.

Agdash substation (220/110 kV). Construction of a new 220/110 kV substation at Agdash and installation of two units of transformers each with capacity of 125 MVA, switches, breakers, protection, communication and control devices, and associated 110 kV transmission lines in the vicinity area of the substation. The new substation and associated 110 kV lines will provide reliable and adequate power supply to meet growing electricity demand in the central part of the country including Akhsu, Ujar, Geokchai, and Kurdamir regions.

Expansion of Absheron substation (500/330/220 kV). Installation of one unit of transformer with capacity of 400 MVA and breakers, to provide reliable and adequate electricity power to consumers in the Absheron industrial and economic hub and improve the power service quality.

Project management support. International consultants will be engaged to assist Azerenergy in procurement and bidding for the tendering of design, supply, and installation contracts; implementation supervision; and other capacity building support.

Institutional strengthening. The Project will strengthen Azerenergy staff capacity through providing on-the-job training on transmission and substation operation and maintenance, environmental management, and social safeguard implementation.

6.    The total cost of the Project is estimated at about $240 million equivalent, including taxes, duties, physical and price contingencies, interest, and other charges. Azerenergy (executing agency) has requested a loan of $160 million from ADB from its ordinary capital resources to help finance the Project. Azerenergy will finance the remaining costs including consulting services, local taxes and duties, interest during construction, and contingencies, from its own resources of an estimated $80 million.

Procurement

7.    ADB-financed goods and services will be procured according to ADB's Procurement Guidelines. International competitive bidding procedures will be followed for civil work contracts costing $3 million equivalent or more. Contracts estimated at less than $3 million will be awarded using national competitive bidding under Azerbaijan's Public Procurement Law of 27 December 2001 and acceptable to ADB. The procurement plan will be updated at least annually, covering the next 18 months of procurement activity.

8.    The operation of transmission lines and substations is highly integrated because of technical specifications. Proper system performance of the transmission and substation facilities also requires strong integration between the equipment suppliers and the construction contractors. The successful bidder will be required to warrant performance of the lines and electrical equipment, which reduces the risk to Azerenergy. Therefore, a plant design, supply, and install (turnkey) contracting approach has been taken to ensure proper system design integration and facility performance. To facilitate project implementation and administration in a more efficient and economical manner, the project subcomponents are packaged into one single plant (turnkey) contract.

9.    The single plant (turnkey) contract for construction of the transmission line and substation facilities will be awarded using international competitive bidding following ADB's standard bidding document: single-stage bidding procedure.

10.    The following table provides an indicative list of all procurement (goods, works, and consulting services) over the life of the project.

11.    Interested contractors from ADB's member-countries who wish to obtain additional information may contact:

Azerenergy Joint Stock Company
Contact : Mr. Islam Rafibeyli, Head of Foreign Economic Relations Department
Tel. No.: (994 12) 4931089
Fax. No.: (994 12) 4985523
Email : irafibeyli@mail.ru
Address : 10, Ac. Abdulkerim Alizade Street, Baku, AZ 1005, Azerbaijan