Azerbaijan has entered a period of huge spending on infrastructure

The railway launching is most likely delayed till the end of 2014, though there are intentions to give a new impetus to a prompt implementation of the project. In early June the Transport Ministers of three countries already discussed this issue in Tbilisi and at the end of the month they met in Kars again. The sides claim that they solve the arising problems efficiently. The rules of passenger and cargo transportations via the corridor are already under discussion, new rails are being laid on the new railway and the Ministers attended joining of the rails in Kars. Azerbaijan again said that Armenia will not get access to the transportation via BTK. Construction of the sea merchant navy in Alyat district and launching of the railway tunnel under the Bosporus will significantly increase transit attractiveness of the project within the framework of the 4^th Pan-European corridor. Implementation of Silk Wind project to transport cargoes from Central Asia through the South Caucasus is very important. Georgian Premier Ivanishvili, who at the end of last year created problems for the BTK implementation, decided to take advantage of it as a political trump card. At the meeting with the NATO Secretary General in Tbilisi he said that Georgia will accelerate the BTK construction to withdraw military contingent and equipment from Afghanistan via this route.

Last year Turkey made an unexpected proposal to open all communications on the South Caucasus, including the road to Kars through Gyumri. A group of Azerbaijani economists has analyzed condition of the road from Baku to Kars via Gyumri. According to the preliminary estimates, its rehabilitation will demand approximately $430 million. The railway reconstruction is hardly possible till establishment of peace in Karabakh and here we also witness the attempts to include economic dispute into politics. The calculations are interesting: for profitable operation of the Baku-Nakhchivan-Gyumri-Kars railway it is necessary to almost triple cargo transportation via this route as compared to the 1980s, when the railway operated. The idea is clear: as railway networks on the South Caucasus are expanded, functioning capacity of all the routes becomes very urgent.

In many areas our government repeated the steps of the Russian government. It would be good if our government would include all Russian economic innovations as well. The Russian government says that it will implement “paid infrastructure projects.” This was an open hint to the fact that the infrastructure projects cannot be a bottomless pit, in which the state funds disappear, because investments must be returned. Till recently the infrastructure projects were presented as a “gift” of the state to either population, or corrupt officials, who embezzle the funds invested into the projects. It is not accidental that partnership between the state and private sector in the infrastructure projects is mentioned more often, though in Azerbaijan it is more problematic, than in Russia. Private investor will never allow embezzlement of invested capital and will fight for their return and getting a profit. In some countries land plots along the new highways are sold to the private investors during construction of the highways. It is not accidental that the government again discusses the issue of paid highways and even is going to adopt a special law. Even of the Transport Ministry is opposed to that, this is inevitable just like launching of the card payment system in urban transport. In the near future they promise to launch this system on 500 buses and 29 routes. The companies guarantee to increase monthly salary of the bus drivers up to 700-800 AZN. This is acceptable salary, but the same has already happened with the “London taxis.” They promised good salary to the taxi drivers and full maintenance of the cars. But everything has gradually slipped into the previous type of relationships. The monopoly in transport is very noticeable. Infrastructure rarely takes into account the maintenance regime, which is inevitable in such projects. Construction of the highways had to be completed in 2014, now the term was delayed till 2015. Meanwhile, construction of some roads took such a long time, so there is a high time to repair them. Was this taken into account during beginning of construction? This system, however, suits the builders.

The same could be said about the railway. The biggest credit project is implemented there today and there is no need in it. Allotting of extra $220 million for this project by the World Bank has become one of the main events in June. After its implementation the carrying capacity of the railway from Baku to Georgian border must increase by several times. This is all great. But last year the Azerbaijan Railway Department paid only 1.9 million AZN worth taxes against planned 9 million AZN. Such things are impossible to explain. The more capital is invested into the field, the less is the return to the budget – this can happen only in our republic.

The country has entered the phase of huge costs, importance of which is rarely explained to the society. One can only regret that the South Korean project of construction of a high speed highway Baku-Georgian border has failed. The project would have led to construction of the similar road in Georgia. The South Caucasus would have a high-speed railway from Baku to Batumi and this would change the regions. One can say that this is just fantasy and the project was very expensive. Is construction of a new town on the Caspian Sea coast, which will demand investments worth $100 billion, by Avesta Company a fantasy too? But the project is slowly moving forward.

One should mention a new positive moment in construction of the highways funded by the international financial organizations (IFO). At first Asian Development Bank (ADB) and now World Bank (WB), which participate in big highway projects, said they will not provide tranches for the projects until full solution of the disputes with the owners of the land plots or houses located along the highways. Azeryolservice open-type JSC was required to submit the report about resettlement along the section of the road from 46 to 65.7 km (the second stage of resettlement covers the section from 65.7 to 91 km). The first 13.5 km of the Baku-Shamakha highway was expanded to four lanes during the reconstruction from 2008 to 2010. Construction of another two lanes started in 2011. Construction of 30 km of the road on the section between 15 and 45 km is currently in progress. As always there is no an acute information what is the deadline of the project).

The government is aware of the fact that quality of the infrastructure projects, especially the automobile roads, leaves much to be desired. In any case we have seen the authorities concern during the parade on the Azadlig square. A giant garage accommodating 3,000-4,000 cars has been recently built under the square. We need a new stricter approach to the quality of the roads so that the building roads do not absorb more and more funds – the construction must be either insured, or the roads’ faultless service should be guaranteed within the announced period of time.

The list could be continued. Several hundreds of millions is needed to implement fiber at home project. The idea is great, but it would have been good to know when and how the invested capital will be returned to the State Oil Fund (SOFAZ) or to the state treasury. The problems with efficiency of the infrastructure projects are connected with the activities of the Clearing House. Russia plans to strengthen functions of the Clearing House. In Russia Clearing House also did not have access to the “untouchable” agencies. It has become clear that there should be none, because this is dangerous both for the economy and for the budget. Our Deputies did not ask parliament to expand duties of the Azerbaijan Clearing House.

The Azerbaijan Ministry of Culture and Tourism has decided to create the Azerbaijani Bureau of Congress. It will organize big conferences, congresses and other international events in Baku. This is a sensible decision, because the country fails to develop “tourism for everybody” for many reasons and foreigners mainly visit the country for business. There is also a problem with occupancy of new prestigious hotels, number of which keeps growing in the country. Several years ago the foreign hotel market specialists recommended Azerbaijan to do that. Now the government is going to stake at business tourism, which gave an impetus to tourism in Finland in the past.