The World Bank plans to allocate 410 million US dollars for the implementation of the “Livable Baku” project.
“Elchi” reports, citing the World Bank, that the project is scheduled to be appraised by October 26, 2026, and approval by the Board of Directors is expected on February 18, 2027.
Financing will be carried out through the International Bank for Reconstruction and Development (part of the World Bank Group).
The total cost of the project is 501.25 million US dollars, with the Azerbaijani government’s share expected to be 91.25 million US dollars. The goal of the project is to improve the quality of life in Greater Baku and surrounding areas and to strengthen resilience against climate threats.
Within the framework of the project, the financing of agreed capital investments and institutional development measures will be provided to address the most urgent environmental problems of the Azerbaijani capital’s urban environment. The project includes three complementary investment components and one project management component. According to the project concept, improving the quality and resilience of Baku’s urban environment is impossible without parallel efforts to address infrastructure gaps, environmental pollution, and strengthen institutional capacities.
The first component of the project, “Integrated Solid Waste Management,” involves financing construction works, procurement of goods and services to upgrade solid waste management infrastructure in Baku and the Absheron district. Key investments include the construction and commissioning of sanitary landfills meeting international environmental protection standards, the organization of waste transfer stations, as well as the creation of material sorting and recovery facilities to increase resource extraction efficiency and reduce waste burial volumes. This component also supports measures to improve separate waste collection at the source, develop recycling, and form a closed circular economy.
The second component, titled “Remediation of Contaminated Lakes and Areas,” is considered the most large-scale component and is aimed at the ecological rehabilitation of natural water bodies and oil-contaminated lands. Within the framework of the component, funds will be allocated for the restoration of three natural lakes that have been subjected to industrial and household waste pollution for decades – the western part of Lake Zigh, Khojasan, and Boyukshor. Furthermore, the component will support the remediation of certain oil-contaminated areas in Greater Baku. The restored areas are expected to provide significant environmental benefits through the expansion of green zones and the clearing of land for urban development.
The third component, “Institutional Strengthening,” is aimed at developing the capacity of state bodies in planning, managing, and maintaining an environmentally friendly and sustainable urban environment. Key measures include strengthening capabilities in integrated urban planning and management; establishing and implementing land resource management systems; and assisting in reforms in the solid waste management sector, including regulatory reforms, tariff regulation reforms, and improvement of the legal framework.
The fourth component, “Project Management, Monitoring, and Evaluation,” will ensure the financing of the operational costs of the project’s Implementation Unit, including procurement activities, financial management, compliance with environmental and social standards, monitoring and evaluation, as well as communication work within the project. Additionally, this component will support the formation of the project’s monitoring and evaluation system, including the collection of baseline data and reporting mechanisms on the results achieved.
The World Bank stated that the need for the project is related to the contamination of land and water bodies as a result of long-standing oil extraction and industrial activities.
“The situation is further complicated by deficiencies in the waste management system and the city’s exposure to natural risks – seismic, flood, and temperature risks. At the conceptual development stage, the project’s environmental and social risks were assessed as high,” the project description stated.
A hybrid Implementation Unit, involving relevant ministries and utility organizations under the Ministry of Economy, will ensure the implementation of the project.
The World Bank states that Azerbaijan is among the countries with an upper-middle-income level globally. “The country’s economic system has historically relied on revenues from the hydrocarbon industry, and this situation has created conditions for directing large volumes of state investment into the infrastructure sector, as well as human capital. However, Azerbaijan is facing the requirement of economic diversification to minimize dependence on oil revenues, and the government is implementing structural reforms aimed at increasing productivity, attracting foreign investment, as well as improving the quality of public services and urban infrastructure. Although Baku has experienced a rapid urbanization process over the last two decades, this development has been uneven.
Climate change further deepens existing problems: warming air increases the ‘urban heat island’ effect and the eco-meteorological pressure on the entire agglomeration. Solving these complex urbanization problems is of great importance in terms of Azerbaijan’s broader goals towards sustainable and resilient economic development,” noted the World Bank experts.
According to experts, effective management of the Baku city ecosystem requires the coordinated work of various agencies such as the Ministry of Ecology and Natural Resources, the State Water Resources Agency of Azerbaijan, the State Committee for Urban Planning and Architecture of the Republic of Azerbaijan, SOCAR, and “Tamiz Shahar” OJSC.
“Institutional capacities, coordination mechanisms, and reliable data systems for integrated management of the urban economy are still in the formation stage. The Master Plan for Baku until 2040, prepared by the Azerbaijani government, defines a unified strategic framework for the long-term development of the capital and includes an investment program worth 55 billion US dollars aimed at turning Baku into a comfortable, competitive, and sustainable agglomeration. The 500 million US dollar ‘Livable Baku’ project directly supports the implementation of the environmental and resilience components of the ‘Master Plan-2040’,” the World Bank noted.