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The biggest problem faced by the people in the village of Kemerli in the northwest of Azerbaijan is the water. Every day, villagers must fetch water from an artesian well, one of the few sources of water. According to a World Bank report, water supply is a problem across Azerbaijan, much of the country’s distribution system is more than 50 years old and reaching the end of its usability, writes the journalist Shahla Sultanova in her article, published in “Transition Online” (TOL) journal.

“The water is not drinkable. It's salty. We carry that salty water in containers for everyday use, mainly for cleaning. It's hard. While the men are working, women and children have to walk to the well and carry big containers back. We buy containers of drinking water every day. It costs a lot of money,” said one of the villagers of Kemerli, Hikmet Hasanov.

According to World Bank report, the subsequent state of many water pipe networks and the associated problems such as intermittent supplies and heavy leakages affect the quality and reliability of services and pose risks to public health. In June 2011, Azerbaijan’s government took action on the issue, earmarking $320 million to renovate water and sanitation systems in 18 of the country’s 64 administrative regions. However, a few months later, a new cabinet order diverted more than a fifth of the water allocation to construction of Crystal Hall in Baku, which will host this year's Eurovision Song Contest later in May.

“Instead of providing people with water, the government reduces water-supply expenditures and uses them for public relations. It has access to many resources. Why [take] money from water-supply projects? There are many regions in the country that suffer from lack of water in summertime. It’s a danger to health,” said Azerbaijani economist and co-founder of Republicanist Alternative Movement Natig Jafarly.

Apparently, water is not the only resource being drained to pay for the fruits of Azerbaijani singing duo's 2011 Eurovision victory, which brought the 2012 contest to Baku, the publication writes. Cabinet order No. 258S reduced by $63.6 million a fund for increasing salaries and pensions and put that money into concert hall. Orders №202s and №233s shifted $108 million from the country’s reserve fund and other projects for apparently Eurovision-related expenses.

A “Transitions Online” review of spending orders by the president and cabinet ministers shows that just in terms of money explicitly allocated for Eurovision, Azerbaijan’s hosting of the contest will be the most expensive in the event’s history. Direct orders – those that specifically mention Eurovision – amount to $75.7 million, of which $63.6 million for organization of the event, $10.8 million to state television for financial guarantees to the European Broadcasting Union and $1.3 million for travel by the national performers in the contest.

But the real cost of Baku’s Eurovision could actually be several times higher than the official estimate. Several government spending orders worth hundreds of millions of dollars appear to indirectly support the event’s organization – allocating money, for example, for construction of an athletic and concert complex; beautification of Flag Square, where Crystal Hall was built; renovation of Baku’s Tofig Bahramov Stadium, etc. TOL’s examination of 11 spending orders indicates a total cost to the state for Eurovision and related items of $721 million, of which $645 million is in indirect expenses. That does not include allocated $62 million for organization of international events.

Other cost estimates differ. Gubad Ibadoglu, head of the Economic Research Center think tank in Baku, calculates the cost at around $620 million manats but says with all so-called indirect expenditures factored in, it could end up close to $1,240 billion. “An unbelievable amount of money is being spent to host the contest,” said Ibadoglu, adding that it’s too high. In his turn, economist Nazim Mammadov said that those numbers are exaggerated in the media, because cabinet ministers didn't clearly explain the projects and costs.

But Zohrab Ismayil, head of the Public Association for Assistance to Free Economy, dismisses that argument. “Crystal Hall was built to host Eurovision. Flag Square is being renovated and work is going on 24 hours a day because Crystal Hall is located there. Baku-Alat road is taking people from downtown to the hall. Tofig Bahramov Stadium is ‘plan B’ as required by the European Broadcasting Union. The minister of sport told local media about 50 buses that they purchased for the song contest. The expenditures should not be categorized as direct or indirect. They are all directly related to the organization of Eurovision,” Ismayil said.