Azernews.Az

By Leman Mammadova

The German-Azerbaijani Chamber of Commerce presented the publication "Market Analysis Azerbaijan 2019" in Baku.

Tobias Baumann, executive director of the German-Azerbaijani Chamber of Commerce, said at the publication’s presentation that the publication contains information on the development stages of various sectors of the Azerbaijani economy.

"We spent about two years on this project and we are pleased with the results," Baumann said.

The executive director noted that the publication also focuses on Azerbaijani-German relations and their development.

Moreover, head of Market Analysis and Communication Nigar Bayramli also gave some information on the publication. She noted that it covers 14 sectors of the Azerbaijani economy.

"The publication describes current trends and projects, as well as opportunities for the German economy," she said.

The publication provides an overview of the 14 priority sectors in the economy of Azerbaijan, analyses current trends and projects as well as presents opportunities in the respective industries.

Energy

Azerbaijan’s energy sector is at a turning point: a law on renewable energy and an investor-friendly tariff policy are in sight and are soon likely to ensure a significant upswing in the industry, reads the Market Analysis Azerbaijan 2019 published by the AHK Azerbaijan.

Azerbaijan is preparing a draft law with DNV GL, the international consulting company of Norway, that is expected to be discussed in April 2019.

Azerbaijani legal framework must meet interests and expectations of investors. In terms of this, it is important to hold talks with potential investors and familiarize them with the existing potential of Azerbaijan in this area. The interests of investors may be considered in the drafts being prepared and thus, in the coming years, Azerbaijan will implement significant projects in the field of renewable energy sources based on private investments.

“Several foreign investors, including some from China, Canada, Turkey, the U.S. and Norway, as well as Arab and EU countries, have declared their interest in entering the market,” reads the publication.

Most of projects targeted the use of wind power.

“Azalternativenerji company is currently appraising a wind power project at Baku International Sea Trade Port. In addition, a feasibility study is being prepared for a first offshore wind farm in the Caspian Sea (Wind Island-1 project). It is expected to have an installed capacity of 200 MW and will be built at a location between Pirallahi settlement and Chilov island,” the publication said.

According to the report, wind power maintains 59.2 percent (15,000 MW) share in total potential for renewable energy. It is followed by solar power-31.6 percent (8,000 MW), biomass 3.5 percent (900 MW), geothermal 3.1 percent (800 MW), and hydropower 2.6 percent (650 MW).

In 2018-2020, it is planned to implement projects for construction of renewable energy plants with an installed capacity of 420 MW, or average annual electricity generation of about 1.2 billion kWh.

Project costs approximately $700 million. However, $555 million of this financing accounts for wind energy projects, $63 million for solar energy, $60 million for bioenergy.

The publication also provided information regarding financial support from the international institutions for the development of renewables in the country.

The World Bank and the Ministry of Energy have signed an agreement on projects to increase the efficiency of small hydropower plants. Moreover SNC-Lavalin Atkins, the consulting company headquartered in Canada, was instructed to analyse the small hydropower market.

The European Bank for Reconstruction and Development (EBRD) also intends to provide financial support for renewable energy projects in Azerbaijan.

According to the publication, a 300 kW floating solar power plant on Boyuk Shor Lake (Baku) is planned for March 2021, which is estimated to cost $100,000-200,000 with finance from the ADB.

“The ADB is also involved in the construction of biogas plants. Waste produced during cotton, cereal and hazelnut cultivation will be used as a source of energy in the future,” reads the document.

Expansion of renewable electricity generation is estimated at 430 MW in 2018-2020, 840 MW in 2021-2025, 925 in 2026-2030.

However, the share of renewables in total power generation is expected to be 15 percent by 2020, 25-30 percent by 2025 and 35-40 percent by 2030.

Transport

The authors of the publication noting lower revenues from oil and gas exports, say that the Government of Azerbaijan continues to implement priority projects in the transport sector, primarily to the expansion of road and railway routes along the North-South and East-West corridors.

The construction of modern logistics hubs and increased investment in the merchant fleet are also on the project agenda, the publication reads. All projects have one goal: to make the country an attractive hub for transit freight transport.

In this regard, the authors highlight two large-scale projects that particularly characterise current developments in road construction: the laying of a new route from Baku to the Russian border beyond Guba and upgrading the west Azerbaijani section of the East-West M-2 highway from Ganja, the country’s second largest city, to the Georgian border.

"Construction of the four-lane Baku (Haji Zeynalabdin Taghiyev settlement)-Guba-Russia border highway started in spring 2018. The road extends for 157 kilometres, including driveways, underpasses and bypass roads. The government allocated $150 million for the project in 2018. All four sections of the route are to be completed by the end of 2020 / beginning of 2021," the report notes.

"In the first half of 2019, a green light was given to the upgrading of the130 km road from Ganja to the border with Georgia via Shamkir, Tovuz, Agstafa and Gazakh. The EBRD intends to provide financial support for the project. The funds are allocated from a road construction loan granted in 2011. A $250 million loan for the second and third tranches of an initially planned project remains unspent and is to be used for the new project. The route is scheduled for operation in 2021," the authors said.

A new project, modernisation of the double-track railway line Yalama / border with Russia-Sumgayit (167 km), will reguire an investment of $325 million in 2019-2022, according to the report. The financing will be provided by the ADB ($150 mln) and Agence Française de Développement (AFD) ($100 mln).

A project entitled "Railway reforms: Restructuring, tariff reform, implementation of an ERP System and International Financial Reporting Standards (IFRS) accounting", in turn, will receive investments from the ADB ($250 mln) and AFD ($75 mln).

Meanwhile, Azerbaijan Railways is expected to invest about $4.9 billion in railway construction and rolling stock over the whole period of 2010-2022.

Also, the country’s Azerbaijan Caspian Shipping Company (CASPAR) intends to invest some $1.5 billion in fleet expansion between 2018 and 2027, the report notes.

"Local and international procurement of 72 ships is to be financed from its own resources, as well as from state funds. Its ferries head for the Kazakh ports of Aktau and Kuryk and the Turkmen port of Turkmenbashi. Ro-ro ships operate on routes to Aktau and Turkmenbashi. Bulk carriers transport goods mainly from Russia and Kazakhstan to Iran. Sea transport from Turkey to Kazakhstan is on the increase," according to the authors.

The AHK notes that among the activities planned to expand logistics capacities, two large-scale projects stand out.

"The Absheron logistics centre in Baku (Garadagh district), which began its operations in August 2018, plans to expand its capacities massively in the near future. Further container and cargo terminals are to be built on an area of 35 ha. The logistics centre, which was built primarily for the export of agricultural products, currently has an annual handling capacity of 11 million tonnes of goods. Sumgait Chemical Industrial Park (SCIP), the state-owned operator of the chemical industrial park in Sumgayit, has announced a plan to build a modern logistics centre covering 10 ha. A number of companies in chemicals and other industries operate in the large industrial park," the publication said.

---

Leman Mammadova is AzerNews’ staff journalist, follow her on Twitter: @leman_888

Follow us on Twitter @AzerNewsAz