EBRD Set to Provide Direct Loans to Cities and Utilities in Azerbaijan

The European Bank for Reconstruction and Development (EBRD) is prepared to shift from lending to the Azerbaijani government to directly financing cities or utility companies, according to Lyn O'Grady, Head of EBRD's Smart Cities Initiative, speaking on the third day of Baku Climate Action Week (BCAW2025).

She emphasized that the EBRD's urban program is based on the Green Cities initiative, which focuses on three key areas, The Caspian Post reports citing local media.

"The first area is support for project preparation and planning. We develop long-term strategic plans that define the city's investment needs, including climate mitigation and resilience measures. The EBRD funds specific elements of these plans," O'Grady noted.

The second area, she said, relates to financing.

"Our approach is based on flexibility. We recognize that conditions vary across countries and cities. In some cases, we lend to the government, as in Azerbaijan, while in others, directly to cities or private companies. We also utilize the capital market. Additionally, we apply blended financing to reduce risks and make investments more attractive. This can include grants, concessional loans below market rates, or guarantees," she explained.

The third area, according to O'Grady, is capacity building.

"Ultimately, we want cities and utility companies to be able to stand on their own. In Ganja, for example, we implemented a corporate development plan that helps the utility strengthen its balance sheet and improve efficiency. Under suitable conditions, we are ready to shift from government lending to directly financing cities or utility companies," the initiative head emphasized.