Signature of a Loan Agreement in the Republic of Uzbekistan
Thursday, 22 October 2009
A Loan Agreement was signed today in Tashkent between the Republic of Uzbekistan and Kuwait Fund for Arab Economic Development whereby Kuwait Fund will provide a loan of Four Million Three Hundred and Forty Thousand Kuwaiti Dinars (equivalent to about US$ 15.62 million) to assist in financing the Rehabilitation/Construction of Irrigation Network and Drainage System in Djizakh and Syrdarya Regions Project
The Loan Agreement was signed on behalf of the Republic of Uzbekistan by His Excellency Rustam Azimon , First deputy Prime Minister , and Minister of Finance and on behalf of the Kuwait Fund for Arab Economic Development by Mr. Hesham Al-Waqayan, Deputy Director-General.
The aim of the project is to increase the agricultural productivity of the main agricultural products in an agricultural area of about 210,000 hectares in Djizakh region and about 222,000 hectares in Syrdarya region, thus contributing to food security, increasing the per capita income and the living standard of the target population of the regions.The above objective will be achieved through the rehabilitation, construction and improvement of the existing irrigation and drainage systems.
The Project consists of works of rehabilitation, construction and improvement of irrigation and drainage networks in each of Syrdarya and Djizakh regions.The Syrdarya region works includes rehabilitation of irrigation networks of a total length of about 347 km including major secondary and tertiary canals with all civil and mechanical works.It also includes drainage structures with a total length of 268 km, construction of 50 vertical drainage structures.Djizakh region works includes construction of a new pumping station with all relevant electrical and mechanical structures, the construction of irrigation canal with a total length of about 15 km and the rehabilitation of a drainage canal of a length of about 68 km.The project also includes environmental mitigation works, institutional support, demonstration farms, project implementation unit, workshop and consultancy services for detailed design, tender documents and supervision of construction.
The cost of the project including physical and price contingencies and interest during construction is estimated at US$ 103 Million equivalent to about KD. 28.56 Million of which about US$ 68 Million is in foreign currency equivalent to KD. 19 Million representing 66% of the total cost of the project.Kuwait fund will cover about 15% of the total cost of the project.The Islamic development Bank and OPEC Fund for International Development (OFID) contribute towards the project financing by a total amount of about US$ 65.36 Million.The Government of Uzbekistan will cover the balance of the cost of the project.
The project is estimated to commence by mid 2009 and be completed by June 2014.
The loan is extended for a term of 21 years including a period of grace of six years commencing from the date of the first withdrawal from the loan or issue of a special commitment by the Fund in favour of a third party pursuant to the first withdrawal application.The loan will be amortized by thirty semi-annual installments, the first of which will be due on the first date when interest or other charges on the loan becomes due after the aforesaid grace period.Thereafter the other installments for repayment of the loan will fall due successively at intervals of six months each.The loan bears interest at 2% per annum in addition to 0.5% per annum to cover administration and other expenses incurred in the implementation of the Loan Agreement.
By extending this Loan it will be the fifth loan made by the Fund to the Republic of Uzbekistan in a total amount of KD. 25.9 Million equivalent to US$ 93.24 Million to finance projects in different development sectors.The Fund also made 3 Technical Assistance Gant and one grant to the Republic of Uzbekistan with a total amount of KD. 578,000 equivalents to about US$ 2 Million.