In its state programs on poverty reduction and sustainable development for 2008–2015 and the socioeconomic development of the country’s regions for 2009–2013, the government of Azerbaijan committed to improving access to basic services.  The programs targeted improved water supply and sanitation (WSS) coverage and quality by 2015, including a 100% coverage and 24-hour water supply in Baku and 80%–85% coverage in the secondary towns and villages.

In support of these targets, the Asian Development Bank (ADB) approved a multitranche financing facility (MFF) of up to $600 million for the Water Supply and Sanitation Investment Program in September 2009. The program was designed to enhance public health and the environment by improving the quality, reliability, and sustainability of WSS services in the selected secondary towns. It envisaged having improved public health and environment in the participating towns, as impact; and improved coverage, continuity, and quality of water supply and wastewater disposal in the participating towns as outcome. Initially planned to comprise five tranches, it ended up with only three tranches because of time constraints and foreign borrowing limits adopted by the government.

Project 1 was approved in October 2009 for a $75 million loan with the same impact, outcome, and outputs as the investment program, but with a focus on Goychay and Nakhchivan towns. Project 2, approved in December 2011 for a $300 million loan, expanded the program coverage to Agdash and Beylagan and completed project 1 balance of works in Goychay and Nakhchivan.  Project 3, approved in December 2013 for a $150 million loan, brought the program to the Agjabedi and Nakhchivan’s peri-urban areas.  It constructed 291 kilometers (km) of water supply and 284 km of sewerage network, benefiting 71,665 people. 

By completion, the program overall achieved its WSS network construction target outputs, including (i) piped-water supply systems, water works, and treatment facilities; (ii) a water quality monitoring system; (iii) sewerage networks rehabilitated, replaced, and expanded; and (iv) wastewater treatment plants (WWTPs) in Goychay and Nakhchivan. The service coverage areas increased in Agdash and Nakhchivan. In Agdash, the increase was based on the town’s expanded administrative area from 1,070 to 2,307 hectares. In Nakhchivan, savings from civil works under the original scope enabled the expansion to peri-urban areas. WWTPs in Agdash, Agjabedi, and Beylagan will be completed and be functional after program completion.

Institutional effectiveness target outputs were partially achieved, particularly for billing and collection, and capacity development. Some sukanals received technical, operational,management, and financial training. The customer database was updated, and the two executing agencies (EAs), the Azersu Open Joint-Stock Company (Azersu) and the State Amelioration and Water Management Committee (SAWMC)reported that all customers connected to the WSS networks were registered and billed accordingly. Twinning programs for the EAs were established, although financing for Azersu’s was not through the program, but through a bilateral agreement between Azersu and Suez Environnement, a French water utility.

A major deviation from the program’s envisaged outputs occurred in WWTP construction in Agdash, Agjabedi, and Beylagan. In November 2016, Azersu proposed to change the WWTPs’ wastewater treatment technology from secondary to primary only (without biological treatment).  ADB-initiated technical assessment showed that primary treatment will not meet the effluent discharge standards that were agreed upon. Despite multiple discussions with Azersu highlighting the importance of investing in biological treatment to meet ADB environmental standards, a consensus was not reached and WWTP construction in the three towns under ADB financing was not realized.  At completion, Azersu awarded contracts for WWTP construction in Agdash, Agjabedi, and Beylagan using government funds. The detailed WWTP designs used for the tenders were financed under the program and complied with ADB’s Safeguard Policy Statement (2009).

Because of successful output deliveries, the program achieved its overall intended outcome. By completion, all program towns have received 100% service coverage, 24-hour water supply, and collection and treatment of wastewater. Before the program, WSS systems in the covered towns were more than 50 years old and in a bad state of repair; and more than 75% of households relied on wells and private water vendors, which provided inconsistent water quality. The program has significantly improved the lives of the population in Agdash, Agjabedi,Beylagan, Goychay, and Nakhchivan. With the improved water source and distribution network, the population now has reliable water supply through metered connections. When the WWTPs are completed, the population will also have access to a functioning sewerage system and will not depend on septic tanks to dispose wastewater. Nonrevenue water has decreased from more than 60% at appraisal to less than 16% at completion.

The EAs were the SAWMC for program activities in Nakhchivan and the Azersu for activities in the other project areas. These EAs were first established under the ADB-financed Urban Water Supply and Sanitation Project and continued through projects 1 to 3.