Azerbaijan Offers Over $1b Cash Deposit Loan

Azerbaijan Offers Over $1b Cash Deposit Loan.

Azerbaijan has offered Pakistan a loan worth $1.2 billion for national highway projects.

The offer comes in response to the Pakistani government’s request for funding for the Sukkur-Hyderabad Motorway (M-6) and the new Hyderabad-Karachi Motorway (M-9).

Prime Minister Shehbaz Sharif sought financial support for infrastructure projects worth $1.8 billion during his recent visit to Azerbaijan. Azerbaijan has offered Pakistan two financing options: Cash Deposit Option: Azerbaijan’s State Oil Fund will deposit cash with the State Bank of Pakistan, and the government can lend this amount to the National Highway Authority (NHA).

Direct Funding: Azerbaijan can provide direct funds for the Sukkur- Hyderabad Motorway with the support of the Islamic Development Bank.

The estimated cost of the Sukkur-Hyderabad Motorway is $1.2 billion, while the cost of the new Hyderabad-Karachi Motorway is estimated at $600 million.

The Pakistani government has hired American companies A.T. Kearney and Nespak to conduct a feasibility study on these projects.

There are differences of opinion among government agencies over the Azerbaijani offer. The Ministry of Finance is not in favor of taking cash deposits through the State Bank and paying from the budget, but is in favor of taking a direct loan.

The Islamic Development Bank has also offered funding, on which a final decision will be made next month. If the M-6 Motorway is built under a public-private partnership, it will take two and a half years to complete, while with government funding, this period could be much longer.

The new motorway will consist of six lanes, the purpose of which is to reduce travel time, improve road safety, and promote industrial and commercial development.

Pakistan has already received $12.7 billion in cash deposits from China, Saudi Arabia, the UA, and Kuwait at the State Bank, on which interest is paid, and their repayments have to be deferred every year. A final decision on whether the government will accept Azerbaijan’s offer or not is expected soon.