28/03/2007: Signing a Loan Agreement for KD. 4 Million for Financing the Dangara Valley Irrigation Project (Phase II) in the Republic of Tajikistan

A Loan Agreement was signed today in Dushanbe between the Republic of Tajikistan and the Kuwait Fund for Arab Economic Development whereby the Fund will provide a loan to the Republic of Tajikistan in the amount of Kuwaiti Dinars 4 Million (Equivalent to about US$ 13.36 million) for financing the Dangara Valley Irrigation Project (Phase II).

The Loan Agreement was signed by H.E. Najmiddinov, Minister of Finance on behalf of the Republic of Tajikistan, whereas, Mr. Hamad S. Al-Omar, Deputy Director-General of Kuwait Fund for Arab Economic Development signed the Loan Agreement on behalf of the Fund. 

The Project aims at increasing the agricultural production, provide employment opportunities in the Project area, and enhance the economy of the country, through implementing Phase II of the Dangara Valley Irrigation Project, covering about 1750 Ha, located in the southern part of the country. 

The project consists of the rehabilitation works for the main Dangara canal and main branch canals (VD2, VD3), the construction of extended main branch (VD3) canal and the development of about 1750 Ha by constructing the necessary irrigation networks and their related structures in addition to Engineering services and the procurement of vehicles, necessary engineering and office equipment. 

The execution of the Project is expected to commence at the beginning of 2007 and is expected to be completed 2010. 

The total cost of the project is estimated at Somoni 99.2 Million, equivalent to about KD. 8.98 million of which the equivalent of about KD. 6.29 Million is in foreign currencies representing 70% of the total cost. The Fund Loan will cover about 45% of the total cost whereas the Islamic Development Bank will provide US$ 10 Million while the government of Tajikistan will provide the remaining balance of the cost equivalent to KD 1.98 million and all necessary funds to cover any additional expenses. 

The Loan is made for 24 years, including a grace period of 4 years, and will be amortized on 40 semi-annual installments, the first of which will be due on the first date on which any interest or other charges on the loan shall fall due after the elapse of the grace period. The loan will bear interest at 1.5% per annum in addition to a charge of 0.5% to cover administrative costs and the expenses of implementing the Loan Agreement. 

By extending this Loan, the Fund will have provided 3 loans to the Republic of Tajikistan as the Fund has previously provided it with two loans to finance projects in the transportation and power sectors totaling KD. 8.6 million equivalent to US$ 29.3 Million.