Azerbaijan: Road Network Development Program (Project 1)

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During the first decade after Azerbaijan regained independence in 1991, most roads in the country were in an unsatisfactory condition because of insufficient maintenance funding and the weak enforcement of vehicle axle–load controls. A large part of the road network consequently required reconstruction or rehabilitation. The poor road conditions resulted in high transport costs, long travel times, and low safety. As the country’s vehicle fleet was expected to increase rapidly over the medium term, it became even more necessary to expand the road network. To help address the situation, the Asian Development Bank (ADB) approved in September 2007 a multitranche financing facility (MFF) aggregating $500 million for the Road Network Development Program.  In October 2007, ADB approved two loans totaling $200 million to finance project 1 of the program.

The project aimed to contribute to sustained economic and social development in Azerbaijan by improving the Masalli–Astara section of the Alat–Astara highway connecting Baku, the country’s capital, to Azerbaijan’s southern border. Its expected outcome was the development of an adequate, efficient, safe, and sustainable transport corridor, linking the country both domestically and internationally.  It had five components, at appraisal: (i) construction of a 59 kilometer (km) four-lane category I highway between Masalli and Astara on the southern corridor; (ii) rehabilitation of approximately 120 km of local, two-lane, category III roads in the project area; (iii) installation of a vehicle weighing station along the project road; (iv) provision of road maintenance equipment; and (v) project management support and consulting services for construction supervision, financial audit, social and environmental assessments, and institutional capacity development.

However, as the preliminary design of the road turned out to be highly inaccurate, with severe cost underestimations, the project was able to build only 22.15 km of the Masalli−Astara highway.  The surge in the prices of fuel and road construction materials in the 2 years between the preparation of the preliminary design and the detailed design also contributed to the enormous cost increases at implementation.  Construction of the project road was completed in July 2017; however, it was not opened to traffic until September 2018 as the government decided to wait until the entire Alat–Astara highway was finished.

A total of 39.5 km of local roads were rehabilitated, although not in the Masalli–Astara highway areas. No vehicle weighing station was installed along the project road, but four such stations were built along two other highways (M1 and M2). No road maintenance equipment was provided; but as planned, the Azeravtoyol State Agency (AAY), the project implementing agency (IA), received management support and capability building services, including for the preparation of project 2 and the development of legal and regulatory frameworks and operational procedures for toll roads.

Mainly because the executing agency lacked experience in applying ADB’s involuntary resettlement policy, the project took about 3 years to start land acquisition and resettlement activities, with no major road works occurring during the first 3 years of implementation. Further delays due to changes in scope, heavy winter rains, and poor contractor performance were encountered.  Poject completion was extended thrice, spanning a total of more than 7 years.

Initially, the Ministry of Transport was the EA, and the Azer Road Service (ARS), an open joint-stock company under the Ministry of Transport, was the IA. Following the reorganization of the Ministry of Transport in January 2016, ARS, renamed AAY, became the EA.  In December 2017, the AAY was restructured into the State Agency of Azerbaijan Automobile Roads, a public legal entity.  A project implementation unit within the AAY carried out the project on a day-to-day basis.

Project Information
Project Name: 
Road Network Development Program (Project 1)
Report Date: 
June, 2020
Main Sector: 
Project Number: 
Report Type: 
Goal 9: Industry, Innovation, and Infrastructure
Goal 8: Decent Work and Economic Growth
Loan Number: 
2354, 2355
Source of Funding: 
Date Approved: 
4 October 2007
Report Rating: 
Less than successful