18 May 2005 - The Japan Bank for International Cooperation (JBIC) is to loan the Government of the Republic of Azerbaijan around ¥30bn ($279m) for the construction of a 400 MW power unit near Baku.

The Official Development Assistance low interest and long term loan will finance the natural gas combined cycle unit in the Shimal thermal power station, located just outside the country's capital.

A statement from JBIC read: "When completed, the project is expected to increase the country's power supply capacity, thereby minimizing power shortages and contributing to the overall development of infrastructure that is integral for economic development."

Azerbaijan has recorded almost 10 per cent growth in recent years, driven by oil and natural gas development.

A number of the country's power stations, built during the Soviet era, have been operating for more than 30 years and are now generating at a lower capacity. In 2003, the available power supply was 4240 MW, which is unable to meet the current peak demand of 4500 MW.

The eastern Baku region is Azerbaijan's main industrial centre and is heavily populated, however, 80 per cent of the existing antiqued generation facilities are located in the west of the country.