Economic Development in Azerbaijan

[Azeri440]

Azerbaijan introduced a 20% cut for maritime transit of Turkish and Kazakh goods

CJSC Azerbaijan Caspian Shipping Company (AXDG) has announced a 20% reduction of tariffs for its services.

The shipping company reports that in order to create favorable conditions for Turkish transit of goods to Kazakhstan through the Caspian Sea, the tariff for cargo transportation from Azerbaijan to Kazakhstan ports and back has been reduced by 20%.

"Now for the one-way delivery (Baku-Aktau or Aktau-Baku) of a standard truck (TIR, length 16.5 meters) the rate will be $1,200 and during round trip transportation - $2,100," AXDG said.

Transportation will be operated from/to new Baku Sea International Trade Port in Aktau.

The fixed tariff is still above the rates for shipping containers from China to Europe and back, where the charge may be even $285 for a standard container.

Azerbaijan introduced a 20% cut for maritime transit of Turkish and Kazakh goods - ABC.AZ

 

[Azeri440]

Turkish PM hopes to agree in Baku on intensive energy cooperation

Prime Minister Ahmet Davutoğlu has departed for talks in Baku.

Before his departure at the Esenboga airport Davutoglu himself said that "we will make every effort to achieve such intense energy cooperation with Azerbaijan, precedents of which have not been previously".

He announced the discussion of new Azerbaijani-Turkish projects.

"We wish a new stage of cooperation with Azerbaijan not because of the tension in relationships with Russia. Turkey pursues multidimensional integrated energy policy that is not new. It is diversifying sources of supply of hydrocarbons, there is a comprehensive understanding with Azerbaijani President Ilham Aliyev," Davutoglu said.

He said that within his two-day Baku visit he will hold negotiations with President Ilham Aliyev on 3 December and deliver speech at the ADA University on 4 December.

Turkish PM hopes to agree in Baku on intensive energy cooperation - ABC.AZ

Gazprombank starts financing SOCAR Polymer’s project

Both plants as part of SOCAR Polymer project will be commissioned in 2018, Farid Jafarov, the general manager of the project said at the 19th Annual Conference "CIS refining and petrochemical week" in Baku on December 2.

He said that Russian Gazprombank has already begun funding as part of the previously concluded loan agreement worth $350 million.

"The total project costs $750 million,” he said. “Some 40 percent of these funds are financed through the equity, 60 percent - loans of Gazprombank as part of project financing without guarantees from the parent company. The guarantee is the project."

He said that both plants as part of the project will be ready for commissioning in 2018.
"Our target market is Turkey,” he said. “SOCAR (State Oil Company of the Azerbaijan Republic) owns 30 percent on the petrochemical market. We are also considering the possibility of implementing new oil refining projects."

SOCAR Polymer’s project is being implemented at the Sumgait Chemical Industrial Park. The project will allow producing 180,000 tons of polypropylene and 120,000 tons of polyethylene a year.

It is expected to start the production of polypropylene in 2016 and the production of polyethylene in 2017. The main part of the products is to be sent to the markets in Turkey and Western Europe.

SOCAR is the sole producer of oil products in Azerbaijan. It has two oil refineries and filling stations in Azerbaijan, Georgia, Ukraine, Romania and Switzerland. The company is the co-owner of the largest Turkish petrochemical complex, Petkim, and other assets in Turkey.
It includes production associations Azneft (the enterprises producing oil and gas onshore and offshore), Azerkimya (the chemical industry enterprises) and Azerigaz.

Gazprombank starts financing SOCAR Polymer’s project - AzerNews

 

[Azeri440]

SOCAR inks deal with British ALE under carbamide plant project

Azerbaijan's state energy giant SOCAR and British ALE Company have signed a major contract on transportation of bulk cargo within the framework of the project of construction of carbamide plant in Sumgayit.

ALE reported that this is the biggest contract the branch has won to date in the Caspian and Central Asian region.

The scope involves the land transportation of over 40 out-of-gauge, super out-of-gauge and super heavy units to the fertilization plant, as well as the provision of project management and engineering solutions.

“We faced tough competition to secure the contract; one of the major factors that allowed us to become the assigned contractor is market knowledge, technical expertise and availability of the equipment,” Fuad Mammadov, Regional Business Development Manager said.

ALE received the first shipment of components in October. The weight of the heaviest transportable installation is 367 tons. The erection is expected to commence early January 2016 and complete in September 2016.

The carbamide plant will be commissioned in late 2017 - early 2018.

Currently, the Korean Samsung Engineering deals with the detailed design of the plant. The plant, which will consist of the sectors producing ammonia, liquid and granulated carbamide, is expected to produce 2,000 metric tons of carbamide and 1,200 tons of ammonia per day.

SOCAR inks deal with British ALE under carbamide plant project - AzerNews

 

[Hurshid Celebi]

Participation of western companies is always a strategic step, for self deference. Perfect and independent agreements have to be signed

 

[Azeri440]

New Information Technology HQ Building

Government will build a Truck Park on the territory of new Baku International Port

 

[Azeri440]

Large-capacity ferries “Made in Azerbaijan” to appear in Caspian Sea

Azerbaijan may launch construction of large-capacity ferries in the country.

Azerbaijan Caspian Shipping Company is negotiating with Baku Shipyard Factory for the construction of large-capacity ferries, said Farhad Guliyev, deputy chairman of the Caspian Shipping Company.

He noted that currently used ferries can accommodate about 50 cars, while about 70,000 cars were ferried in 2015.

Baku Shipyard Factory is a joint venture of Azerbaijan’s State Oil Company, Azerbaijan’s Investment Company and Singaporean Keppel Offshore & Marine.

The factory inaugurated by President Ilham Aliyev in September 2013 is designed for the construction of a wide range of specialized and commercial vessels, including multipurpose offshore ships such as platform supply vessels and tankers and cargo ships. The company also offers the ship repair possibility.

After reaching its full capacity, the factory will be able to carry up to 100 repair or rebuilding works per year.

Azerbaijan's Caspian Sea Shipping Company is among the major ship owning companies in the Caspian basin and its main activity is cargo transportation predominantly in oil and oil products in the Caspian, Black, Mediterranean, and Marmara Seas.

The company carries the most freight traffic through the Europe-Caucasus-Asia transport corridor from Baku. The goods are sent to the Kazakh port of Aktau in 24-26 hours and Turkmen port of Turkmenbashi in 14-16 hours, and vice versa.

Earlier, Azerbaijan made a nearly 40-percent reduction in the transit cost of cargo transportations by large trucks to the Aktau and Turkmenbashi ports and reduced tariffs by 20 percent in order to improve the attractiveness of maritime transportation of cars traveling from Turkey to Kazakhstan.

The country that develops its transit opportunities also expressed readiness to offer more attractive price for transportation if required.

Large-capacity ferries “Made in Azerbaijan” to appear in Caspian Sea - AzerNews

Azerbaijan to launch new solar plant in 2016

Azerbaijan, a country rich with both hydrocarbon and alternative energy resources, is planning to complete a new project of a solar power plant next year.

The State Agency on Alternative and Renewable Energy Sources of Azerbaijan told AzerTag state news agency that the project of the Garadagh-Sangachal solar power plant will be completed in 2016.

It is planned to install nearly 36,000 solar panels produced with the latest technologies and to create a reliable electricity transmission system in the plant.

The government decided to generate solar energy as solar lights produce no pollution or harm to the environment.

The construction of the solar power plant in the Sangachal settlement of Baku's Garadagh district was launched in 2014 by Azalternativenerji LLC.

With its a total capacity of 9 MW will ensure electricity needs of the Sangachal settlement and the whole Garadagh district.

Azerbaijan, which enjoys good climatic conditions for developing alternative energy on the backdrop of the world oil-price crisis, has an opportunity to invest revenues from hydrocarbon exports to the development of the alternative energy sector.

Last year, the volume of investment made in the development of the alternative energy sector of the country exceeded 63 million manats ($60 million), some 35 million manats ($33.3 million) of which was invested in the development of solar energy, as most of the country’s potential in this area is accounted for solar energy, which is estimated at 5,000 MW.

Currently, the share of alternative energy sources in Azerbaijan's energy basket is less than 1 percent, mostly represented by small hydroelectric power plants. Now it is planned to increase this share to 20 percent of the total volume of energy consumption in Azerbaijan by 2020, which requires 7 billion manats ($6.7 billion) of capital investment.

Within five years, Azerbaijan plans to build up to 100 facilities for alternative energy.

Azerbaijan to launch new solar plant in 2016 - AzerNews

 

[KediKesenFare3]

Do it like Norway. Export your fossil resources and use green energy for your own consumption. Best way to get rich.

 

[Oksoko]

solar energy, as most of the country’s potential in this area is accounted for solar energy, which is estimated at 5,000 MW.

If it reaches 5000MW , it will be a huge step for AZ. It almost equals to 1 nuclear power plant capacity.

 

[Azeri440]

If it reaches 5000MW , it will be a huge step for AZ. It almost equals to 1 nuclear power plant capacity.

possible with combined Solar and Wind Energy , Azerbaijan will also build a nuclear plant but with only 1000MW capacity.

 

[Hurshid Celebi]

with only 1000MW capacity

Welcome in the club

 

[Azeri440]

ADB to allocate Azerbaijan $2.24B

The Asian Development Bank has approved a new business plan for operations in Azerbaijan.

The business plan that will cover 2016-2018 will provide Azerbaijan with funds from ADB only as ordinary capital resources, the bank reported on December 14.

The estimated cost of the ADB loan program in Azerbaijan for 2016-2018 is $2.24 billion. The total cost of the projects, taking into account the interest of the Azerbaijani government, is $3.08 billion.

ADB funds will be directed to water, transport (road and railway), as well as energy projects.

The total volume of technical assistance, which will be provided by the Asian Development Bank in 2016 and 2017, amounts to $3.8 million. The business plan does not envisage funds for 2018.

The funds of technical assistance are intended for the preparation of the investment program in the field of railway, multitranche water supply and sewerage services funding program, promotion of financial integration, support for improved governance, the drafting of the education sector development project.

Founded in 1966, ADB has 67 members today. The bank's headquarters is located in Manila, Philippines. Azerbaijan became member of the bank in December, 1999. The country’s share in the bank's capital is 0.5 percent.

Since 1999, Azerbaijan has received 20 project loans, and 1 project grant totaling $1.64 billion, including 6 non-sovereign loans of $143 million, and $14.4 million in technical assistance grants to support its development programs.

ADB's leading shareholders are Japan and the U.S. (31.2 percent of the total share capital), India and China (12.8 percent), Australia, South Korea and Canada (16 percent).

In September, the ADB has kept its forecast for economic growth in Azerbaijan at a level of three percent in 2015. The bank also kept Azerbaijan’s GDP growth forecast at roughly 2.8 percent in 2016.

The ADB also reported that it believes that Azerbaijan will see one of the lowest inflation rates in Central Asia. According to the bank forecasts, inflation will hold steady at six percent in 2015 and 5.5 percent in 2016.

ADB to allocate Azerbaijan $2.24B - AzerNews

 

[Azeri440]

Azerbaijan Railways needs $550M to restore electric train traffic in Absheron

Two more new high-speed electric trains manufactured by Stadler Rail Group will be delivered to Azerbaijan, said Javid Gurbanov, head of the Azerbaijani Railways CJSC. These trains run on the Baku-Sumgayit route.

"One of the trains will be delivered very soon, while the second one will be delivered to Baku in late December or early January,” he said. “We also have the used trains produced in Riga. We repaired them. They can be used in case of necessity."

Gurbanov said that Stadler Rail Group’s electric trains carry nearly 3,000 people a day, adding that the fare cards are planned to be used in these trains.

At present, three of Stadler’s double-decker trains carry out passengers of Baku-Sumgayit route. The trains have 396 seats, including 84 business class seats, and have a total capacity of 919 passengers. Passengers can enjoy WiFi during their ride.

He further noted that the electric train traffic on the Absheron peninsula will be restored in the future.

"The electric trains will run on the Baku-Zabrat-Pirshagi-Novkhani-Jorat-Sumgait route and through Khirdalan and Bilajari on its way back to Baku,” he said. “This is a great circle. The length of only one line is 91 kilometers, two lines - 180 kilometers."

“The surrounding areas of railway lines are cleared from illegal constructions, communication lines,” he said. "It is necessary to build crossings, install the security fences along the railway line," he said.

Gurbanov said that the total cost of the project is estimated at about $500-550 million.

"Today we can not allocate these funds,” he said. “Therefore, we commissioned Stadler’s trains on the Baku-Sumgayit route and increased their speed. At present, the route can take 40 minutes. We have not commissioned the stations in Khirdalan and Bilajari. But we plan to do this with the support of the government and the profit from the freight traffic growth."

Azerbaijan’s capital, Baku, and its industrial city of Sumgayit were connected with a renovated railway and modern train system this September.

Currently, nearly 3,000 people use electric trains on Baku-Sumgayit route, and their number will reach up to 20,000-30,000 people after the expansion of the route, according to the company’s head.

Azerbaijan Railways needs $550M to restore electric train traffic in Absheron - AzerNews

 

[KediKesenFare3]

What happened? @Azeri440

 

[Hurshid Celebi]

Devaluation in Azerbaijan and Iraq cause of low oil prices

 

[Azeri440]

What happened? @Azeri440

Azerbaijan introduces freely floating rate for its manat

The value of Azerbaijan’s national currency, manat, dropped on December 21, following the Central Bank of Azerbaijan (CBA) decision to allow a freely floating exchange rate.

The exchange rate between manat and US dollar changed from 1.0499 to 1.5500 after the policy shift. The official exchange rate of euro to Azerbaijani manat was set at 1.6850 manats.

The CBA reported that the decision was made taking into account the strengthening of the long-term shocks in the foreign economy to equilibrate the balance of payments, save foreign exchange reserves in the country at a critical level and secure competitiveness of the national economy in the international arena.

The decision means that the rate of manat will be formed in accordance with the fundamental factors determining correlation of supply and demand in the foreign exchange market.

The Central Bank will participate in the foreign exchange market in accordance with this regime.

“Difficult processes in the global economy, recent decisions of leading banks in the world, rise of demand on the energy market, weakening economic growth in major countries that are the main oil producers, as well as global factors have led to over threefold decline in oil prices since June 2014,” said the CBA.

“All these processes affected Azerbaijan as well, which is closely integrated with the global economy processes. As a result, the foreign trade surplus and currency receipts to the country have decreased sharply.”

Given that of all these processes have a significant pressure on the exchange rate of manat and currency market of the country, devaluation has been carried out this year, and the economy, foreign exchange market and the exchange rate of manat have been adapted to an oil price of $50-55.

However, a sharp decline in oil prices in July has again increased pressure on the rate of manat and currency markets, the CBA noted. Also, the continuing devaluation in neighboring countries have had a negative impact on the competitiveness of the national economy in the international arena.

In connection with the emerging conditions, the Central Bank observed a need to bring the foreign exchange market and the exchange rate of manat in line with oil prices. Thus, U.S. dollar and euro in Azerbaijan rose by almost 50 percent as of December 21.

However, the regulator will take complex measures to ensure the security of the population’s deposits and other deposits, improve the deposit insurance system, enhance the financial sustainability, liquidity position and capital of banks.

Experts believe the rising dollar and cheapening manat will allow the budget of the country to increase its profits in manat.

Azerbaijan’s switching to the floating rate of manat is a coercive measure that is explained with the ongoing processes on the world currency market, believes Ogtay Haqverdiyev, doctor of economic science.

“What we see now, is the real price of manat,” said the expert, describing this measure of the CBA as forced.

The current step of the Central Bank can be regarded as the beginning of the irrevocable movement towards the real value of the manat, he noted.

“I think the process of the dollar’s rise in price will gradually continue throughout 2016,” Haqverdiyev said, adding that the real value of the dollar could reach three to five manats.”

The expert noted that the restoration of the reserves of the CBA is not the main purpose of the transition to a floating rate.

“Reserves are made to ensure the way out of such force majeure situations. However, in terms of economics, any national currency should be released. Its real value is to define the principle of supply and demand in the foreign exchange market. In such a situation, the economy is developing compatible,” said the expert.

Haqverdiyev notes developing of the non-oil sector is a primary task facing Azerbaijan now. “More than 93 percent of our exports are oil and oil products. It is necessary to develop modern science intensive spheres of production, to develop nanotechnology. It is necessary to choose and produce such a product that will find its place in the global market and will be competitive,” he stressed.

Meanwhile, the banks operating in Azerbaijan suspended money transfers in connection with the devaluation of the national currency. Remittances are scheduled to be resumed in the afternoon.

This also affected the other banking transactions involving foreign exchange, including currency exchange.

Azerbaijan introduces freely floating rate for its manat - AzerNews