Azernews.Az

By Nigar Orujova

Azerbaijan has opted for privatization as part of its anti-crisis actions while the country switched into the strict regime of savings for the next 4 years.

President Ilham Aliyev has recently noted the need to prepare a broad program of privatization, attracting both foreign and local investors, to improve the business environment and accelerate business revival.

“There are many state owned enterprises in Azerbaijan, which activities are suspended. In some cases, these companies that own plots of land are in a dilapidated state,” the head of state said.

The new privatization program is expected to be implemented transparently with participation of international experts. Moreover, favorable conditions will be created for local and foreign businessmen to support their interest in investing into Azerbaijan’s economy.

The process of privatization is not the guarantee of the economic revival, but it strengthens the competitiveness of the economic sphere, which includes a combination of private and public ownership.

Which state-owned companies can be privatized?

There are still a sufficient number of businesses that are entirely on the state balance sheet, as well as enterprises that are partially privatized, Member of Parliament Rufat Guliyev said.

“There are more than 600 joint-stock companies, which are partially privatized in Azerbaijan. The share of the state in these companies sometimes reaches 30 percent. If these enterprises are privatized with direct international investment, it will provide a large inflow of foreign currency in Azerbaijan. In addition, this will entail the influx of foreign technologies, create new jobs and expand the tax base,” he explained.

More complex and capital-intensive facilities in need of new technologies have not been privatized so far, the MP added. “However, their privatization could significantly improve and revitalize the economy.”

One of such state-owned companies is health facilities. Deputy Prime Minister Ali Ahmadov announced earlier that most of the medical institutions of Azerbaijan could expect the privatization in the future.

Privatization process in progress

More than 1,000 different public facilities were privatized in Azerbaijan in 2015, according to chairman of the State Committee for Property Affairs Kerem Hasanov.

“In 2015, 685 small state enterprises and objects, unfinished buildings, vehicles, 456 land plots, and 20 joint stock companies have been privatized. Last year, 464 non-residential area and 298 plots of land were leased and five state-owned enterprises were privatized through investment competitions,” he said.

Hasanov believes that with the modern requirements it is necessary to conduct research and prepare proposals to identify new areas for privatization, which will increase the state budget revenues.

Meanwhile, MP Vahid Ahmadov said privatized facilities should be operated well after the purchase, but not left for better times to be invested in.

Privatization itself is aimed to make the facility work better, he said.

The impact on the economy will depend of the process, Ahmadov said, adding that privatization process should be followed by healing process. In addition, the facility should work in its field at least five years to continue working in this direction in the future.

There are many fields where privatization can take place including energy sector, oil and gas sector, etc., he said.

The MP said that both local and foreign investors can participate in this projects, adding that first local investors should be attracted to develop non-oil sector, which has grew by eight percent last year.

Ahmadov further added that even large companies like the state oil company SOCAR and Azerbaijan Airlines have fields that can be privatized.

“For instance, there are many problems in connection with price of tickets of AZAL. If there is another company along with AZAL in the Azerbaijani market, this will impact the prices,” he said.

The MP believes that some facilities of SOCAR can also be sold, so the company works like joint-stock company.

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Nigar Orujova is AzerNews’ staff journalist. Follow her on Twitter: @o_nigar

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