Distressed Companies Holding

Baku / 06.11.20 / Turan: On November 5, by decree of President Ilham Aliyev, the management of a number of state structures was transferred to the Azerbaijani investment holding created in August this year.

Among them are the State Oil Company, CJSC Azerbaijan Airlines, CJSC Azerbaijan Railways, CJSC Azerbaijan Caspian Shipping Company, CJSC Baku Metro, CJSC Azergold, OJSC Azerenerji, OJSC Azersu, OJSC Azerishig, OJSC Melioration and Water Management of Azerbaijan, OJSC Azerkosmos, OJSC International Bank of Azerbaijan, Azer-Turk OJSC, Azeristiliktejhizat OJSC, Clean City OJSC, Baku International Sea Trade Port CJSC, Aztelecom LLC, Azintelecom LLC, Azerpocht LLC, Baku Telephone Communications LLC and State Insurance Commercial Company.

Vahid Ahmadov, member of the Milli Mejlis Committee on Economic Policy, Industry and Entrepreneurship, positively assessed the transfer of management of a number of state structures to the Azerbaijani investment holding.

The MP told Turan that when the investment holding was created, it was already clear that serious changes were coming, and certain groups of companies with investment attractiveness would be concentrated here.

“These companies, the management of which was transferred to the holding, are important companies in the economic life of Azerbaijan, strategic objects. We can expect that these companies will undergo personnel changes, certain reforms, and even some of them will be transferred to privatization,” Ahmadov said.

Economist Togrul Veliyev believes that no major changes are expected after the transfer of management of a number of state-owned companies to the newly formed holding. “The creation of the Azerbaijan Investment Holding a few months ago was associated with these reforms, the state wanted to change the management system of companies, because the management system in state-owned companies is ineffective, and at one time the President said that it was necessary to introduce a corporate governance system. The merger of the companies mentioned in this holding means that the corporate governance system must be implemented. Perhaps, in the future, each of them will be privatized or formed as a commercial type company, because the listed state-owned companies are still mainly funded from the state budget. The latest decree was also issued to improve their effectiveness. But the fact is that we are constantly taking steps to change something in a few years, these issues are raised, and it is noted that companies must be profitable. I don't believe in the effectiveness of these steps. Because the management of companies of different directions has been transferred to a single body, and in this case their effective management is impossible.

The economist noted that the transfer of state-owned companies to a single governing body will not entail their profit-making activities: “State budget revenues are already declining, oil prices are low, and starting next year we are planning to reduce dependence on oil and this step was taken so that companies started to work profitably. To what extent this will be possible is unclear, because Azersu, Azerishig, and Water Management are high-cost organizations."    -0—