The project appraisal is scheduled by October 26, 2026, and its approval by the Board of Directors is set for February 18, 2027.
Financing will be provided through the International Bank for Reconstruction and Development (IBRD), part of the World Bank Group.
The total project cost reaches $501.25 million, with the Azerbaijani government's contribution expected at $91.25 million. The project aims to improve quality of life and strengthen resilience to climate threats in Greater Baku and adjacent areas.
The project will finance an agreed set of investments and institutional development measures to address the most pressing environmental problems of the urban environment in Azerbaijan's capital. The project includes three complementary investment components and one project management component. The concept of change is based on the recognition that improving the quality and resilience of Baku's urban environment is impossible without parallel efforts to overcome infrastructure gaps, eliminate environmental pollution, and strengthen institutional capacity.
The first component, '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 operation of sanitary landfills meeting international environmental standards, organization of waste transfer stations, and creation of sorting and material recovery facilities to improve resource recovery efficiency and reduce waste disposal. This component also supports measures to improve separate waste collection at source, develop recycling, and foster a circular economy.
The second component, 'Remediation of Polluted Lakes and Territories,' is the largest and focuses on environmental rehabilitation of natural water bodies and oil-contaminated lands, which represent Baku's most serious environmental liabilities. Financing will be allocated for the restoration of three priority natural lakes—Zykh, Khojasan, and the western part of Boyuk Shor—which have been subjected to industrial and domestic pollution for decades. Additionally, the component will support the remediation of certain oil-contaminated sites in Greater Baku. Restored areas are expected to provide significant environmental benefits through increased green space and land release for urban development.
The third component, 'Institutional Strengthening,' aims to develop the capacity of state bodies in planning, administering, and maintaining an environmentally friendly and resilient urban environment. Key activities include strengthening capacities in integrated urban planning and management; establishing and implementing land management systems; and promoting reforms in the solid waste sector, including regulatory reforms, tariff reforms, and improvement of the legal and regulatory framework.
The fourth component, 'Project Management, Monitoring, and Evaluation,' will cover operational costs of the Project Implementation Unit, including procurement, financial management, compliance with environmental and social standards, monitoring and evaluation, and communication activities. It will also support the establishment of a project monitoring and evaluation system, including baseline data collection and results reporting mechanisms.
According to the World Bank, the need for the project stems from decades of oil extraction and industrial activity, which have caused large-scale soil and water pollution.
'The situation is compounded by deficiencies in the waste management system and the city's exposure to natural risks—seismic, flood, and temperature risks. The environmental and social risks of the project at the concept development stage are classified as high,' the project description states.
The project will be implemented by a hybrid Project Implementation Unit under the Ministry of Economy, involving relevant ministries and utility organizations.
The World Bank notes that Azerbaijan is an upper-middle-income country. 'The republic's economy has traditionally relied on revenues from the hydrocarbon sector, which has enabled significant public investment in infrastructure and human capital. At the same time, Azerbaijan faces the need to diversify its economy to reduce dependence on oil revenues, and the government is implementing structural reforms aimed at increasing productivity, attracting foreign capital, and improving the quality of public services and the urban environment. Although Baku has experienced a period of intensive urban growth over the past twenty years, this process has been uneven.
Climate change exacerbates challenges: rising temperatures intensify the urban heat island effect and eco-meteorological pressure on the entire agglomeration. Overcoming these systemic urban problems is key to Azerbaijan's broader ambitions for sustainable and resilient economic development,' World Bank experts emphasize.
They believe that effective management of Baku's urban ecosystem requires coordinated work by a number of agencies, including the Ministry of Ecology and Natural Resources, the State Water Resources Agency of Azerbaijan, the State Committee for Urban Planning and Architecture, SOCAR, and the solid waste management enterprise OJSC 'Temiz Sheher.'
'Institutional capacity, coordination mechanisms, and reliable information systems for integrated urban management are still under development. The Baku General Plan until 2040, prepared by the Azerbaijani government, forms a common strategic platform for the long-term development of the capital and provides for an investment program of $55 billion aimed at transforming Baku into a comfortable, competitive, and sustainable agglomeration. The $500 million 'Livable Baku' project directly contributes to the implementation of the environmental and resilience components of the General Plan 2040,' the World Bank notes.