Joint IFC/BP Linkages Project Boosts Local Enterprises in Azerbaijan
In Washington, D.C.:
Thoko Moyo
Phone: +1 (202) 458-8517
E-mail:
tmoyo@ifc.org
Baku, Azerbaijan June
12, 2006-The Micro Finance Bank of Azerbaijan (MFBA) today issued its
first supplier finance loan to the local Azeri company Azmetco. This is
the first step in an important new
initiative, which will improve access to finance for Azerbaijan’s local
oil and gas industry supplier and service enterprises.
Azmetco, a local company specializing in metering services, is the first
enterprise to receive a loan from the Supplier Finance Facility (SFF) pilot,
under the BP/IFC Supplier Linkage Program. The program was set up
by BP, on behalf of its project partners, and the International Finance
Corporation (IFC).
The SFF pilot project is a joint credit facility aimed at supporting the
development of Azerbaijan’s local oil and gas industry suppliers, as identified
through the BP/IFC Supplier Linkage Program. Resources for the SFF are
provided by BP, IFC, and the Micro Finance Bank of Azerbaijan. Loans to
local suppliers are backed in large part by the local companies’ contracts
with BP and its partners.
The project is in line with BP and its partners’ target to double their
total spending with locally-owned companies by 2010, raising it to over
$500 million a year.
Local companies eligible to receive SFF loans will be selected for competitive
pre-qualification exercises by the BP Enterprise Centre, then will pass
through MFBA’s credit appraisal, and will receive final approval from
the SFF Credit Committee, which comprises representatives of the three
parties involved.
This pilot project is being implemented through an IFC grant agreement
to MFBA and a total loan capital of $316,000. This will provide loans
for up to three selected local suppliers of BP and its partners in Azerbaijan.
Under this agreement, BP will provide $140,000 on behalf of its partners,
IFC will provide $140,000 (of which $20,000 is for technical development
and appraisal of this pilot phase), and the remaining $56,000 will be invested
by MFBA.
“Through the implementation of this project, IFC recognizes the importance
of the development of the oil and gas service sector for Azerbaijan’s
long-term development,” said Shahbaz Mavaddat, Director of IFC’s Southern
Europe and Central Asia Department. “This project also highlights the
very positive role SMEs can play in this development,” he added.
“This project improves access to finance for Azeri SMEs, while also helping
them to leverage linkages with large companies. The Baku-Tbilisi-Ceyhan
(BTC) pipeline and SFF are good examples of the value add that large projects
can bring to host countries, their businesses, and local communities,”
said Rashad Kaldany, Director of IFC’s Oil, Gas, Mining, and Chemicals
Department.
About IFC
The International Finance Corporation, the private sector arm of the World
Bank Group, promotes sustainable private sector investment in developing
and transition countries, helping to reduce poverty and improve people’s
lives. IFC finances private sector investments, mobilizes capital in the
international financial markets, helps clients improve social and environmental
sustainability, and provides technical assistance and advice to governments
and businesses. Its 178 member countries provide its share capital and
collectively determine its policies.
From its founding in 1956 through FY05, IFC has committed more than $49
billion of its own funds and arranged $24 billion in syndications for 3,319
companies in 140 developing countries. IFC’s worldwide committed portfolio
as of FY05 was $19.3 billion for its own account and $5.3 billion held
for participants in loan syndications.
For more information, visit www.ifc.org.
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