The World Bank
1818 H Street, NW, Washington, D.C. 20433, USA

IDA News Release No. 95/90ECA

Contact: Jan Pakulski
Phone: (202) 473-1797
Fax: (202) 676-0585


WASHINGTON, June 29, 1995 - The World Bank Group yesterday approved a rehabilitation loan to improve the water supply in the Azerbaijani capital, Baku. The loan, in the form of a credit of SDR 38.8 million ($61 million equivalent * ), is provided by the World Bank’s affiliate organization, the International Development Association (IDA).

Azerbaijan, one of the smallest countries in the Former Soviet Union, has a population of 7.4 million people with over half of it living in urban areas. Baku is the administrative, commercial, industrial and cultural center of the republic. Nearly 35 percent of the country’s population lives in the capital city. The inefficiency of water supply constitutes one of the major problems of Baku; households are especially hard-hit While almost all of Baku’s households are connected to the public water supply system, water is available on average 22 days a month for a maximum of 11 hours a day. Poor water supply is caused by a lack of financial resources for maintenance, rehabilitation and investment, a non-commercial approach to pricing, and a lack of an overall policy framework for the water sub-sector.

The Greater Baku Water Supply Rehabilitation Project aims to:

Although such rehabilitation projects do not usually contain policy conditions, this project will ensure that the newly-created joint stock company, Apsheron Regional Water Company (ARWC): becomes fully operational; establishes a twinning arrangement with a modern, market-oriented water agency from abroad; and consolidates its operations under one management structure in one location.

Social Assessment

During the preparation phase, a detail social assessment study was conducted to determine the project’s potential impact on residents of Baku and to intensify dialogue between the Baku Water Department and its clients. The assessment was carried out in a highly participatory manner and consisted of the following activities:

  • two rapid household surveys to examine water availability and quality, the structure of water demand, the consumers’ willingness to pay, etc.
  • informal household visits and interviews in the community;
  • institutional assessment and discussions with national and local governments, international institutions, enterprises and non-governmental organizations (NGOs);
  • informal interviews with private sector suppliers of water and water-related equipment;
  • case studies of households and enterprises;
  • consultation with local population, representatives of academic community, NGOs, media, etc.


Major Findings of the Social Assessment

  • Low income groups suffer the most from the current water situation.
  • Most households in Baku have developed strategies to cope with the unreliable water supply.
  • Households spend up to 17 times the cost of their monthly water bills on alternative water supply.
  • Households are willing to pay more for better public water supply service.
  • An estimated 40-60 percent of public water is not paid for.
  • There are geographic and socio-economic variations in the distribution of water and the way users deal with an unreliable public water supply.
  • The main reason for intermittent water supply is insufficient pressure which is caused by a dysfunctional pumping station, illegal pipe connections, and leakages.
  • Insufficient water pressure is the most important cause for poor water quality as well as intermittency.

The project consists of five components:

Metering and Billing: about 15,000 domestic water meters will be installed and the billing system will be changed from flat rate to meters billing.

Consumer Education: television commercials, posters and leaflets will provide practical advice on how to reduce water losses and optimize water use.

Household Leakage: 180,000 households will have water fixtures installed by independent contractors to eliminate leakage.

Vehicles, Workshops and Equipment: crew vehicles, light vans, trucks, and other construction equipment will be acquired, and workshops will be replaced or refurbished and supplied with the requisite tools.

Rehabilitation of Jeiranbatan and Kura River Treatment Facilities: renovation of the chemical dousing and filtration systems, refurbishment of the presettlement tanks and the filter washwater systems, replacement and/or rehabilitation of electrical transformers, high-lift pumping stations, switching gear, pumps and internal piping and filtration facilities.

Rehabilitation of Pumping Stations: the 13 major pumping stations and 261 booster stations will be rehabilitated with pump replacements and repair, rehabilitation of electrical transformers, and replacement of internal piping.

Master Meters: master flow and turbine insertion meters will be installed at each of the water sources, major pumping stations, service reservoir discharge outlets, and key distribution points in the network.

Technical Assistance: the commercial operation of ARWC will be enhanced through corporatization, a twinning arrangement, and related training programs. A newly-acquired headquarters will also be remodeled and equipped with appropriate office equipment.

Preparation of the project’s second phase within a national policy framework and a regional water and sewerage master plan.

Policy Implications of the Social Assessment

The social assessment enhanced the policy dialogue by identifying the need for:

  • improved governance and the establishment of an autonomous water agency;
  • a water policy that encourages water conservation and is accompanied by the installation of properly functioning water meters to allow a quantity-based tariff structure;
  • effective monitoring of private wells supplying drinking water and illegal water vending which pose health risks;
  • a mechanism to take into account the specific needs and potentials of the various consumer groups in each community and to incorporate adequate participation and consultation in water system planning and implementation.

The total cost of the project is $94.9 million (including interest earnings generated during construction). In addition to IDA, the European Bank for Reconstruction and Development will provide $23 million and the Government of Azerbaijan will contribute with $10.9 million.

The credit is extended at the standard IDA terms and carries no interest for 35 years, with a 10-year grace period.

IDA, the World Bank’s sister organization, provides assistance to the world’s poorest countries on highly concessional terms. Azerbaijan joined the World Bank in September 1992. The water supply rehabilitation credit is the second operation supported by the World Bank in Azerbaijan.

Copies of the Social Assessment Study for the Greater Baku Water Supply Rehabilitation Project are available on request by contacting the name listed above.

* IDA credits are denominated in SDRs (Special Drawing Rights), which are valued on the basis of a “basket” of currencies. The U.S. dollar equivalent of the SDR reflects the exchange rates existing at the time of the negotiations of the credit.