After months of talks, Azerbaijan Caspian Shipping Co (Asco) has obtained a $42m loan from an international, government-backed bank to expand and modernise its fleet.
The Baku-based company announced that on 1 February it signed an agreement with the European Bank for Reconstruction & Development (EBRD) to finance “two handysize-type dry cargo ships”.
Asco did not elaborate, apart from saying the vessels it is eyeing will “meet the latest environmental requirements of the International Maritime Organization”.
The total cost of Asco’s fleet expansion project will amount to $60m. The EBRD loan finances 70% of the vessels’ acquisition cost, with the company contributing the rest out of its own “internal resources”.
The indicated volume of the project and the brief to expand with technologically advanced vessels clearly suggest that Asco will target newbuilding orders, resale acquisitions or very modern handysize tonnage already on the water.
Apart from polishing its environmental credentials, the oceangoing handysizes will help Asco expand its business remit outside its core waters in the Caspian Sea.
“The new vessels will support Azerbaijan’s drive to bolster the country’s position as a crucial link along the extended Middle Corridor route connecting Central Asia and South Caucasus with global markets,” the EBRD said.
Asco has been in talks about the loan since September 2022, when it announced that it had clinched a mandate letter for “a large-volume” EBRD credit.
Baku calling
It is not a surprise that Asco is seeking to modernise its dry fleet of 14 small and old general cargo ships built between the 1980s and the 2000s.
Apart from its 22 tankers, 13 ferries and two ro-ros, it boasts a large offshore fleet of 210 ships that includes support, supply and crane vessels.
Asco gave signs of its ambition to expand last year, when it teamed up with Azerbaijan energy firm Socar to acquire three aframaxes.
Despite Asco’s state ownership, its new loan comes without Azeri government guarantees attached. This reflects the “successful reforms” and corporate management improvements implemented lately in Azerbaijani state companies, the company said.
The EBRD is an inter-state lender owned by 72 countries, including those comprising the European Union.
Founded in 1991 just after the fall of the Soviet Union, the bank co-finances projects in countries of the former Eastern Bloc. it has invested more than €3.6bn in 189 Azeri projects to help diversify the country’s economy.
