bne:Invest in Azerbaijan
Content: 3 Top Story 5 Interview 7 Feature 9 Sector 11 Economics & finance 14 Chart 15 News in brief
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September 2014
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AZPROMO hosts business forum with Macedonia, strengthening ties with Balkans The Azerbaijan Export and Investment Promotion Foundation (AZPROMO) welcomed business delegates from Macedonia on September 9, looking to build and expand ties between Azerbaijani and Macedonian companies. The event is in line with previous efforts to create relationships with other Emerging European partners. The Azerbaijan-Macedonia Business Forum was
held at the organization’s headquarters in Baku. Aimed at strengthening trade and investment between the two countries, the forum was attended by approximately 40 delegates of both counties, representing sectors ranging spanning manufacturing, agriculture, construction, finance, healthcare and consulting. The delegates were welcomed by Azerbaijani Minister of Economy and Industry, Shahin
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Mustafayev, who noted in his address that there was ample room to expand cooperation between the two countries. Trade between Macedonia and Azerbaijan has indeed been modest so far; in 2013, the two countries exchanged $0.4m in goods and services, down from a peak of $1.6m in 2010. "Despite the fact that the two countries have signed two agreements on avoidance of double taxation and investment promotion, and set up an appropriate legal framework, the indicators of cooperation between Azerbaijan and Macedonia don't correspond to the potential of the two countries,� he said. His Macedonian counterpart, Deputy Prime Minister and Minister of Finance Zoran Stavreski, highlighted investment opportunities for Azerbaijani companies in Macedonia and encouraged delegates to find new opportunities to cooperate. After the event, he told journalists that, just like neighbouring Bulgaria, Macedonia would be interested in having access to the Trans Adriatic Pipeline (TAP), which will carry Azerbaijani gas to Europe, once it comes online in 2018- 2019.
Azerbaijan has long enjoyed good relations with Central and Eastern Europe, particularly with former Soviet countries like Moldova, Ukraine, Belarus and Georgia, with which it enjoys high levels of foreign trade and visa exemptions. However, the rapprochement with the Balkans is more recent, and speaks volumes for the Caspian country’s strategic importance to the region. The events of the past summer left Europe seeking alternatives to Russian gas. While Western Europe is less dependent on Gazprom, Southeast Europe depends almost entirely on it. Particularly vulnerable to a potential suspension of Russian gas transit through Ukraine are Bulgaria and Macedonia, and, to a lesser extent, Serbia. The three countries have limited storage facilities, and alternative domestic energy sources, and no access to gas from North Africa or Norway. Azerbaijan already signed off on sending 10bn cubic meters (cm) a year of gas exports through TAP, but the pipeline will eventually be able to carry double that capacity. The difference would be more than enough to cover the energy needs of small consumers like Macedonia and Bulgaria.
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Top story
PASHA aids capital market development with first nonfinancial bond issue Azerbaijan's success in becoming an economic and financial hub for the region depends much on the country's ability to develop its capital market. PASHA Bank's underwriting of Azerbaijan's first non-financial corporate bond is a big step in that direction. In 2011, the President of Azerbaijan endorsed the "State Program on the Development of the Securities Market of the Republic of Azerbaijan for 2011-2020", which envisaged the development of the securities market through: (i) improvement of capital market infrastructure and the underlying
trading architecture; (ii) stimulating supply to enhance the range of capital market instruments and services; (iii) encouraging demand through corporate education and public awareness outreach; and (iv) strengthening the legal and regulatory framework, as well as improving the capacity of the regulatory body. The foundations for the development of Azerbaijan's corporate bond market were laid earlier this year, when in March the Azerbaijani state issued its debut Eurobond as a benchmark. Rated 'Baa3/BBB-', the 造1.25bn, 10-year
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of Embawood’s first bond issue, when its PASHA Capital subsidiary acted as the underwriter for the Baku-based furniture manufacturer. Embawood issued 10,000 bonds with a par value of AZN1000 ($1280) and a coupon of 11%. The bonds, among the first from a non-financial Azerbaijani company to be listed on the Baku Stock Exchange, began trading on August 22. The funds raised by Embawood through this bond issue will help the company, one of the market leaders in the South Caucasus, to implement large-scale projects. Eurobond with a 4.75% coupon was issued into a turbulent market, but it still managed to garner huge interest from investors. The order book was oversubscribed at nearly $4bn. The sovereign issue was followed in June with a $500m debut Eurobond issue due 2019 from International Bank of Azerbaijan, which was priced with a coupon of 5.625%.
"The first bond issue of a non-financial company on the Baku Stock Exchange marks an important milestone in the development of Azerbaijan’s capital markets, and PASHA Bank is delighted to have been part of this process," says PASHA Bank’s Chief Investment Officer and member of the Board, Taleh Kazimov.
Azerbaijani companies are increasingly looking towards Azerbaijan’s capital markets to raise It's not hard to see why Azerbaijan's sovereign funds on favourable terms. And Embawood’s bond bond issue was three-times oversubscribed. Amid issue is the latest in a series of corporate bond a global slowdown, Azerbaijan's economy grew by issues that PASHA Capital has underwritten. 6% last year, buoyed by rising oil and gas sales, and an economy that is rapidly diversifying into "Our success in this area has led to PASHA Bank areas like ICT, green technology and the consumer and PASHA Capital being named ‘Best Investment sectors. Bank’ and ‘Best Brokerage Company’ by EMEA Finance magazine. We are therefore best placed to These new companies require access to capital help Azerbaijani companies to raise capital on the to grow, so PASHA Bank was delighted to be part domestic capital markets," says Kazimov.
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Interview SOFAZ bullish on opportunities in East and Southeast Asia Azerbaijan's $37bn sovereign wealth fund is diversifying its portfolio by making investments around the world to reduce the risks to the state's rainy-day fund and ensure the long-term prosperity of the country. The State Oil Fund of the Republic of Azerbaijan (SOFAZ) was established by presidential decree in December 1999 to "distribute the country’s oil and gas wealth among the present and future generations." The fund introduced a new investment policy in 2012 designed to diversify its holdings: in the latest move, a commitment was made to invest $1.8bn in the yuan by the end of this year, the fund's CEO Shahmar Movsumov told the Financial Times in an interview in June, in what is being regarded as a further indication of the Chinese currency's rapid move toward reserve status. China's currency will be added to the fund's growing portfolio of currencies. SOFAZ has already added 30 tonnes of gold to its basket over the last two years and holds an increasingly diverse portfolio of currencies, mostly of those countries that Azerbaijan has business with, including: the Australian dollar (0.5%), Turkish lira (1.2%), Russian ruble (1.3%) and the Korean won (1.2%), in addition to the main holdings of US dollar (51.7%), euro (35.4%) and the British pound (5.3%).
However, the fund is also actively seeking investments in other countries. Its first significant overseas investment was the purchase of several million dollars worth of real estate in London in 2012, to which has been added other top tier properties in Paris, Moscow and, most recently, Seoul. Real estate has proven to be an attractive investment in these times of global volatility. Worth $447m, SOFAZ's investment in the Pine Avenue Tower A office complex in Seoul came after a year of weighing different options in the East and Southeast Asian real estate markets, currently among the most attractive real estate markets, according to Movsumov. Observers believe that the Korean real estate investment could mark a new direction for SOFAZ as it is becomes increasingly interested in investing in East Asia and Southeast Asian assets. SOFAZ’s eastern focus is not all that surprising. At the moment, more than half of its assets are in Europe, which has had a chequered economic performance over the past six years. With the European Central Bank forecasting growth in the Eurozone of just 0.9% in 2014 and little sign the economy is going to pick up any time soon, SOFAZ has been forced to look further afield for attractive assets.
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Russia has been another destination that has attracted SOFAZ attention; asset prices in Russia are at historical lows due to the political situation, and as a sovereign wealth fund with significant trade with Russia SOFAZ takes a long-term view on the valuation of Russian assets. In 2012 SOFAZ invested several billion dollars to take a significant minority stake in Russia's second largest state-owned bank VTB, which was also its main private equity investment since the 2012 overhaul in its investment strategy that allowed it to invest directly into companies. In 2013, the fund followed up with the purchase of another a 3% share in VTB worth $500m.
December 1999 with the professed aim of distributing the country’s oil and gas wealth among the present and future generations But the bulk of the fund's resources are aimed at investments that will bolster Azerbaijan's economic prosperity. The 28th largest sovereign wealth fund in the world, SOFAZ has invested heavily in Azerbaijan's infrastructure to facilitate the country’s exports. The Baku-Tbilisi-Ceyhan (BTC) oil pipeline, the reconstruction of the Samur-Absheron irrigation system of the water pipeline from Gabala to Baku, and the BakuTbilisi-Kars railway are noteworthy infrastructure projects funded by SOFAZ.
The fund also invests in the energy sector when necessary. Recent examples of such investments include the building a new semi-submersible rig in the Caspian Sea in 2013 to support offshore exploration, and the acquisition of the Azerbaijani state’s share in the Southern Gas Corridor CJSC in 2014. SOFAZ has also financed SOCAR’s STAR oil refinery in Turkey and a large-scale petrochemical complex in Azerbaijan, which will be located at the border of Garadag and Absheron regions and is A larger part of SOFAZ's allocations are to more traditional assets: 6.84% of its portfolio is invested expected to come online between 2018 and 2020. in international financial institutions, for example. In other areas, SOFAZ finances projects initiated In 2013, “SOFAZ made a fresh commitment by the Ministry of Communications and High to the International Finance Corporation (IFC) Global Infrastructure Fund, following two previous Technologies and the Ministry of Education, namely the countrywide fibre optic cable network commitments to the IFC Catalyst and IFC ALAC and the state programme for education of funds,” Movsumov said in a January 2014 Azerbaijani youth abroad. Since 2001, SOFAZ interview with The Business Year. has allocated humanitarian funds to support the refugees and internally displaced persons (IDPs) The State Oil Fund of the Republic of Azerbaijan resulting from the Nagorno-Karabakh conflict. was established by presidential decree in The VTB purchase aside, SOFAZ bases its equity acquisition decisions on a “monitoring of the MSCI World Index, a public equities index in which SOFAZ has previously invested,” according to Movsumov. The MSCI World lists stocks from 22 developed markets and Hong Kong, which means that the VTB purchase could be the exception, not the rule.
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Feature and Azerfon, all operate GSM networks. In a first stage, the ministry will assist Nakhtel to offer its services using the other operators’ base stations throughout the country.
Nakhtel granted 4G license for NAR, possibilities for countrywide rollout In early September, Nakhtel, the Nakhchivan Autonomous Republic’s (NAR) CDMA mobile operator, was awarded a license to deploy its 4G network in the region by the NAR cabinet of ministers. The company is expected to roll out its 4G network in NAR by early 2015. During the same week, the central Ministry of Communications and High Technologies announced that the operator would also be allowed to offer internal roaming services in the rest of Azerbaijan, but did not specify the date when these services would be introduced. The move could be the first step to a full-fledged network rollout in the whole. Nakhtel would thus become Azerbaijan’s fourth countrywide mobile telephone operator if its bid to acquire a license for the 1,800-2,100 MHz GSM frequency band is approved. The other three telecommunications companies- Azercell, Bakcell
The entrance of a new operator is expected to increase competition in the mobile telecommunications market in Azerbaijan, where the penetration has stagnated at 105/ 100 inhabitants since 2012 according to the State Statistics Committee. A 2012 European Bank for Reconstruction and Development (EBRD) report notes that Azerbaijan lags behind its neighbors when it comes to its mobile market penetration, ranking below the poorer Ukraine, Moldova, and Georgia. The average market penetration in the region is, according to the EBRD’s “2012 Electronic Communication System Comparative Assessment”, 136 per 100 inhabitants. Incumbent Azercell dominates the Azerbaijani telecommunications market with 4.5 million subscribers, which translates into a market share of 42%. Controlled by TeliaSonera, the company has built over 1,200 base stations in Azerbaijan and reported voice and data demand increases of 120% in 2013. Azercell’s dominance was somewhat eroded by Azerfon’s 2006 market entrance, which was compounded by the fact that the new entrant received the first 3G license in the country in 2009. Operating under the brand name Nar Mobile, Azerfon has secured a market share of 23% over the last eight years. The incumbent and Bakcell, the second largest ICT operator, launched their 3G services in 2012, more than two years after Azerfon. Until now, the competition between the three existing operators has not driven voice costs
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down, which average $0.09, higher than elsewhere in the region. Instead, the three companies have focused on value added services such as mobile bill and public transport payment services to keep competition at bay. Bakcell has positioned itself as the mobile broadband operator of choice, with traffic as fast as partner Manchester United’s players, and reported a growth in data traffic of 100% in 2013. In addition to mobile broadband, Bakcell provides mobile Internet dongles under the Sür@ brand name. The devices have proven to be very popular, reaching a market share of 45%, higher than Sazz, an ICT operator that focuses solely on such products. Nakhtel’s announcement comes at a time when the telecommunications sector is experiencing significant changes. After some delays, the mobile number portability (MNP) service was introduced in February 2014, allowing customers the flexibility to change operators, but to preserve their telephone numbers. In a market dominated by pre-paid services, the move grants significant freedom to customers and opens the door to increased competition among operators.
(MCHT), announced that it was continuing with the privatization of state-owned fixed telephone operators Aztelekom and Baku Telephone Communications Production Association (BTCPA) by turning them into open joint stock companies by the end of the year. Meanwhile, the MCHT is continuing to work on the nationwide fiber optic project that aims to connect the entire country to the Internet. Judging by recent growth trends, however, Azerbaijani consumers appear to value mobility over fixed services. Since its introduction in 2009, mobile broadband subscriptions reached 4.1 million by year-end 2013, while fixed broadband customers were estimated at 1.3 million in 2012. Meanwhile, the fixed telephone penetration rate stands at 19% and is largely accounted for by urban dwellers, while the mobile penetration rate has exceeded 100% for years.
The population’s penchant for mobility, combined with the symbolism that NAR holds for Azerbaijanis, and with the autonomous region’s limited connectivity to the rest of the country, could turn Nakhtel into a new favorite operator, Elsewhere in the sector, in September the Ministry particularly if its pricing is more aggressive than the current operators’. of Communications and High Technologies
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Sector the Games, and visas-upon-arrival for foreigners holding tickets to Olympic competitions.
EU visa scheme takes effect, boosting tourism hopes With less than 270 days left until the European Olympic Games, changes in the visa agreement between Azerbaijan and the EU will make it easier for Azerbaijanis to travel to Europe, and for Europeans to visit the country, boosting hope that the country could see a surge in visitor numbers.
In recent years, foreign travel, both inbound and outbound, has been on the rise in Azerbaijan. According to the State Statistics Committee, the number of incoming visitors almost doubled between 2007 and 2013, from 1.3m to 2.5m. During the period, the average tourist expenditure quadrupled, up to $591 last year. Russia, Georgia, Turkey and Iran account for the lion’s share of travelers to Azerbaijan, with Russia alone contributing to over a quarter of the 2.5m visitors. With the exception of Iran, all these countries enjoy visa-free or visa-upon-arrival regimes with Azerbaijan. Ukraine, Kazakhstan and Uzbekistan, which enjoy the same visa-free regime, are also among the top ten countries of origin for inbound tourism, which is rounded out by the UK, the US and Germany. Visas may have been a deterrent to traveling to Azerbaijan until now, but things are looking up. Authorities in Baku have made no secret of their commitment to promote Azerbaijan as a tourist destination in Europe. From the hosting of the Eurovision Song Contest in 2012 to sponsoring Atletico Madrid, this year’s champion of the Spanish La Liga, Azerbaijan has made successful efforts to promote itself as a brand and a tourist destination in Europe. What better branding campaign could there be than sponsoring a football club that's t-shirts boast the country’s national slogan, “Azerbaijan, Land of Fire”.
As residents of the capital count down the days to the European Olympic Games, or Baku 2015, the first day of September brought the much-awaited news that the visa facilitation agreement between Azerbaijan and the EU, signed in November 2013, had taken effect. The agreement, which slashes application fees and eases the processing and granting of visas, is expected to boost tourism flows between Europe and Azerbaijan. The news comes after August’s decree issued by the There are no shortage of sites and activities Azerbaijani Presidency regarding the granting of for business and leisure tourism in Azerbaijan. The world-class exhibition center in Baku, visa-free entrance to accredited participants in
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host to major business and industry fairs in the Caucasus like BakuBuild and BakuTel, is complemented by the event-hosting capabilities of the various four and five star hotels in town. Many internationally recognized hotel chains have a presence in the Azerbaijani capital, including Hyatt Regency, JW Marriott, Hilton, Fairmont, Four Seasons, Jumeirah and Ramada. Located in the capital’s new landmark, the Flame Towers, Fairmont boasts the largest conference halls in town, which can accommodate over a thousand people.
Old City, with its winding streets, antique and souvenir shops, and a Unesco Heritage complex comprising of the Maiden Tower and the Palace of the Shirvanshahs. Baku is also home to some quirky museums like that of miniature books and the newly renovated carpet museum. For those on the lookout for day trips, the muddy volcanoes in Gobustan, the petroglyphs in the Gobustan National Park, Azerbaijan’s second Unesco World Heritage site, and the Temple of Fire in Ateshgah, ancient home to fire-worshipping Zoroastrians, are all good options.
There is a growing number of local luxury hotels, such as Qafqaz Hotels & Resorts, a chain that operates 10 hotels in Baku and the regions. Qafqaz General Manager Halil Duru confesses that Baku’s hosting of large-scale events is beneficial for the hotel business. “Our average occupancy rate across all of our hotels in Lankaran, Gabala and Baku is 48%," says Duru. "But in early 2014, we met with the Committee of the European Olympic Games and we reached an agreement to host athletes and visitors, which will guarantee us an occupancy rate of 70% during the Games in 2015.”
While Baku remains the destination of choice for travelers to Azerbaijan, many, including the Qafqaz chain, are betting on the development of regional tourism. Owned by one of the country’s largest holdings, Gilan, Qafqaz operates six hotels in Gabala, 220km northwest of Baku. “Gilan Tourism makes efforts to bring groups of tourists from other countries in order to raise the interest in and awareness about Azerbaijan, says Duru, the general manager. "In order to make their stay more pleasant, we have to build the necessary infrastructure first. We are working on it. In Gabala, we built Azerbaijan’s second sky resort, Tufandag, an amusement park, and are now building an aqua park. Gabala has a rich history and beautiful nature. More infrastructure is needed to make it into an attractive tourist destination, but there is great potential there.”
Baku 2015 is building an Olympic Village that will host the majority of athletes and their delegations, but the ripple effect of the event is sure to be felt across the hospitality sector, as the number of visitors is forecast to be as high as Visa facilitation schemes, hosting of large-scale 2m. events, restoring historical sites, and building modern entertainment and business venues, Aside from skyscrapers, business venues and are all measures that point to Azerbaijan’s a spectacular seaside boardwalk with musical growing appetite for tourism. The regions might fountains reminiscent of Dubai and Las Vegas, take longer to catch up to the capital, but the the Azerbaijani capital has something for Caucasian country speaks with one voice in cultural travelers as well. Within the confines welcoming visitors to its shores. of sturdy, medieval walls is the well-preserved
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Economics & finance Azerbaijani banking sector remains stable but NPLs rising Azerbaijan's banking sector remains stable as the economy enjoys an upswing thanks to high world oil prices and conservative government spending, according to the rating agency Fitch in a report released in August.
"The banks face emerging capital constraints due to lack of scale, fast loan growth, limited new equity injections from banks' private shareholders and only moderate profitability. The latter is somewhat stronger at the banks that focus on retail, micro and SME lending, due to higher margins and lower impairment charges," Fitch said.
Many banks are re-focusing on consumer lending as a middle-class begins to emerge in Azerbaijan. Consumer loans now account for 40.7%, or However, Fitch warned that the banking sector's asset quality and performance remains vulnerable AZN6,819m as of July 1, up from 37.7% a year to volatility due to the country's over-dependence earlier. However, worried about an emerging bubble the central bank of Azerbaijan has already on cyclical commodity exports. tightens restrictions on consumables to slow "Asset quality is the major risk, given growing retail growth. Banks issued consumer loans worth AZN605.2m in the first six months of 2014 down credit risks (although these have been managed from AZN882.3m over the same period a year fairly well to date due to the only moderate earlier. consumer indebtedness) and mostly long-term corporate lending, which is significantly exposed to project finance and construction activities, often The credit terms on auto-loans has also been tightened due to the deterioration of the banking with bullet repayments," Fitch said in a report. sector's portfolio quality in this type of lending. Azerbaijan is home to 44 banks, with the state and Currently the sectors non-performing loans market leader International Bank of Azerbaijan (NPLs) are running at 5.24% of the total loan accounting for almost half the sector's entire portfolio or AZN877.6m, up from AZN781.8m assets. Banks increased lending to the economy (5.67%) in the same period in year earlier. That is by 21.64% to AZN16.754m in January-June 2014 equivalent to an increase of 12.2% in NPLs over compared with the same period a year earlier. the last year. Consumer lending rose even faster up by 31% in the same period.
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Azerbaijan to invest $20bn in
Azerbaijan's economy grows
Turkey
4.3% in the first half
Azerbaijan is already one of the biggest foreign investors in Turkey and it plans to expand its commitment with another $20bn invested over the next eight years, according to Faig Baghirov, Azerbaijan's ambassador to Turkey.
Azerbaijan's GDP expanded by 4.3% over the first half of this year from the year-earlier period, according to a report by the State Statistics Committee.
Turkey is rapidly emerging as Azerbaijan's most important partner. A "golden triangle" is being built between Turkey, Azerbaijan and Georgia on the basis of mutual cooperation. Baghirov reemphasised that Turkey "ranks first in foreign economic relations of Azerbaijan," he told a conference, according to reports.
The non-oil the economy continued to grow more quickly than the rest, up by 6.8% over the period, to account for 56.8% of the total economy. At the same time, the raw materials production growth and its share of the overall economy both continued to shrink: the volume of production of value added in mining and processing of oil and gas decreased by 3.1% over the same period.
The biggest contributions to GDP were: industry The trade turnover between Azerbaijan and Turkey (45.5%), followed by services (31.14%), agriculture (11.4%), and trade and repair of vehicles (7.6%). stood at $3.3bn last year and Baku has hopes of Despite a big push by the government, information increasing this figure up to $15bn by 2022. and communication services accounted for just 1.7% of GDP. "Azerbaijan will invest $20bn in Turkey in the next eight years. This will become Azerbaijan's The GDP per capita also grew, rising by 1.1% largest investment abroad. The majority of this on year over the same period to amount to investment will be made in the Izmir region," Baghirov said, adding the government is looking at AZN3,621.3 ($4,617.3), the report said. investment in the energy sector in particular.
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Azerbaijan's oil sector receives 30% more investment in H1 Investment into Azerbaijan's oil sector was up by nearly a third (30.4%) in the first half of this year to AZN3.45bn, according to the State Statistics Committee. Investment into the sector has been rising steadily in recent years. In 2013 investments of AZN4.82bn were made in the sector over the whole year, an increase of 24.2% on year. However, investments into the industrial sector outstripped those into the oil sector: a total of AZN4.17bn was invested into industry over the same period, an increase of 5.4% year-on-year. Of this total AZN3.44bn was invested into the mining industry, an increase of 29.5% year-onyear. In addition, another $10.5bn of foreign investment was attracted to Azerbaijan's economy last year.
Azerbaijani foreign trade turnover falls 10% to $18bn in for seven months of this year Azerbaijan's foreign-trade turnover dropped by just under 10% in the first seven-year months of this year compared with the same period a year earlier, to a total of $18.13bn, according to the State Customs Committee.
The country's foreign trade surplus also fell from $7.68bn in the same period last year to $1.25bn as of July 2014. Exports were down 4.4% year-on-year to $13.25bn in January-July, with the state companies accounting for $12.47bn of the total and the private sector accounting for another $659.57m. Imports fell even harder, dropping 20.97% to $4.88bn over the first seven months of this year compared with the same period year earlier, with state-owned companies accounting for $1.22bn of the total and the private sector another $3.47bn.
Azerbaijani exports to Georgia increased by 7% in the first seven months Trade relations between Azerbaijan and Georgia continue to flourish as exports from Azerbaijan increased by 6.97% of the first seven months of this year to $347.28m, according to the National Statistical Service of Georgia. Azerbaijan remains the third largest exporter to Georgia and currently accounts for 7.2% of the country's total imports. Turkey is in first place with $968.4m, or 20.1% of Georgia's total imports. China is second with $420.68m, or 8.7% of the total. Georgia's main import products from Azerbaijan include gasoline, oil, building materials, electricity, glass, and the latest edition margarine among other products.
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Chart Azerbaijan looking to boost alternative energy sources Oil is both a blessing and a curse for Azerbaijan. It provides the money that allows economic development but the country is still desperately trying to wean itself off its addiction to hydrocarbons. In recent years the government has invested some AZM300m ($380m) into developing renewable energy sources. The government
has an ambitious program that runs to 2020 when it hopes that 20% of Azerbaijan's energy consumption will come from renewable sources, according to the head of the State Agency for Alternative Energy Sources Akim Badalov. A start has been made, but renewables is still only account for and a 1% of the total.
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News in brief Azerbaijan almost doubles electricity exports
"The funds will be used for on-lending to qualifying corporate and individual customers for industrial and residential energy efficiency projects and equipment," EBRD said in a press release.
Azerbaijan has almost doubled the volume of electricity exports year-on-year to 134kW/h, according to the state Customs Committee.
The loan is part of the EBRD's Caucasus Energy Efficiency Program (CEEP), which provides loans to local partner institutions for financing industrial "Compared with the same period in 2013, the export and residential energy efficiency improvements, of electricity has increased by more than 1.83 times," promoting energy savings and helping to reduce greenhouse gas emissions. the committee said, according to local reports. Azerbaijan plans to export electricity to Afghanistan and Iraq through Iran, and already has an agreement to synchronize its energy system with the systems of Russia and Iran.
BP invests $1bn in Azerbaijan in first half of this year
Azerbaijan's major electricity producer Azerenergy The British company BP has invested just under produced more than 13 billion kilowatt-hours of $1bn in the first half of this year and maintains electricity in January-July. its position as the biggest commercial investor in Azerbaijan, according to the companies and financial reports.
EBRD finances Azerbaijani
The company spent a total of $969m in JanuaryJune, slightly down on the $1.02bn it spent in the same period a year earlier.
energy efficiency projects The European Bank for Reconstruction and Development (EBRD) has committed $5m to finance energy efficient see improvement projects in Azerbaijan. The funds will be distributed by domestic bank Demirbank to entrepreneurs and households to buy more efficient equipment that will reduce energy consumption, as well as products like insulation, solar water heaters, double glazing and other energy-saving devices.
The lion's share of the contracts ($378m) went on the services and products of small and mediumsized enterprises, while another $240m was spent on the company's 13 joint-ventures. Spending on state-owned companies was a mere $65m, and most of the remainder was spent on product and services supplied by international companies.
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Sanctions on Russia won't
Azerbaijan's state oil company
affect operations in Azerbaijan, drills a new Caspian Sea gas VTB says
well
Sanctions slapped on Russia by America and the European Union earlier this year will not affect the Azerbaijani subsidiary of Russian state and bank VTB, VTB Senior Vice President Mikhail Yakunin told Interfax in August.
The State Oil Company of Azerbaijan (SOCAR) is drilling a new well in the Guneshli gasfield in the Azerbaijani sector of the Caspian Sea, SOCAR said in a statement in the middle of August.
The 3,500-metre deep well will tap 150,000 cubic metres of gas reserves and 15 tonnes VTB was specifically singled out in the last round of condensate, according to the company's of sanctions, but as the local subsidiary in Baku does not tap the US or European capital markets it geologists. will not affect the bank's operations, he said. The field is part of a larger complex and is located in the shallow part of the Azerbaijani "VTB Bank (Azerbaijan) does not use this financing tool in its activities. Clients of VTB Bank sector, allowing it to be developed without the participation of foreign partners and their (Azerbaijan) will not sense any changes in the sophisticated technology. bank's work because of sanctions, and the bank will continue providing its full range of services Altogether the company is planning to drill 20 new and meeting its obligations in full," he said. wells as well as renovate some old wells in the field. While most of the rest of the Commonwealth of Independent States (CIS) countries have fallen into an economic mire caused by the global slowdown, Azerbaijan has remained the exception. The economy is still expanding strongly and its macroeconomic fundamentals remain extremely robust, which has underpinned the strength of the country's financial sector. Banking sector assets are growing by about 10%, a year and currency exchange rates have remained stable.
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