Expand the Oil Fund

Development of the infrastructural projects is in a full swing, but the government is unwilling to transfer ownership of the projects to private owners. Centralization of economy governing has strengthened everywhere and converting of the State Agency for Alternative Power into the state company is one of the manifestations of that. On the one hand, this could mean emergence of two unequally competing agencies in power generation. But on the other hand, the agency, which will have a role of arbitration and involvement of private capital, including foreign one, into a new field could lose interest in its function once it becomes a state company. It is not ruled out that it as well as many other agencies will stake only on the state support.

We wrote a lot about the road construction projects, which a centre of infrastructural development for a long time. One should hope that time of impetuous waste of money by the companies is coming to the end. President said recently that by 2014 majority of the infrastructural projects will be fully completed. By that time we will be able to evaluate quality of many of the projects. But this issue is discussed rarely here. We are not accustomed to insurance of road works and there are no guarantees of no-failure service of the road in reality. We have seen recently in Russia after collapse of the highway in Vladivostok that such mechanisms of quality guarantees are very important. The choice is not big –either have an insurance, or guarantee n-failure service of the project during a certain period. Insurance is used now in some big construction and mounting works. For instance, Pashasigorta has insured construction works of the Shakhdag mountain-ski resort. 17-km-long bridge across the Baku bay, which will be built by the South Korean company, has been insured as well.

Intention of many agencies and state companies to unseal the Oil Fund to implement many projects is obvious. Road and water projects, which were subsidized by the State Oil Fund of Azerbaijan (SOFAR), were changed by new ones. Ministry of Communication and Information Technologies is going to request 350 million AZN from the government to implement the project of laying fiber-optical cable to each Azerbaijani house. The project is interesting, but with such big projects one needs at least approximate “decoding” of the project value.

There are still many secret facts in the budgetary expenses or subsidies of SOFAR. Information about big projects was given away unwillingly in the past as well. After the new amendments enter into force, access to such information will be even more limited. The projects funded by the international financial organizations will be more transparent, though with certain limitations.

In this context it is interesting to look at the project of expanding of Baku-Muganly highway (this is the second road to the central and western Azerbaijan). It seems that this is the first case when 124-km-long reconstructed road will be expanded without stoppage of the traffic. The project is delayed, because of technical problems. The Transport Ministry also plans to expand the Baku-Georgian border highway almost as twice. But the Ministry decided to postpone the project. The same could be said about the Shamakha-Guba highway, it has many advantages. But the government started carefully selecting the projects, trying to choose either strategic project or new infrastructural areas.

There are also problems with the Baku-Tbilisi-Kars railway. Turkish Transport Minister said 60% of works have been carried out. Two problems are mentioned here. These are slowing down of construction works on the Georgian sector of the railway, because of weather conditions. But the works resumed now. Deputy Transport Minister of Azerbaijan assured that construction and rehabilitation works will be completed till the end of this year. The second problem is construction of 4.5km-long tunnel between Georgia and Turkey. The slope turned out to be sliding and it demanded new engineering solutions.

It is good when the project instigates other projects. Construction of a new trade port is in progress 60 km away from Baku, construction of which will be completed in 2015. At the first stage capacity of the port will be over 8 million tons of cargo and over 50,000 of conditional units of large capacity containers. Depending on growth of volume of cargo transportation, capacity of the port will reach 25 million tons of cargo a year as well as about 1 million large capacity of containers. The necessity to build a new port and create free economic zone is caused by the Baku-Tbilisi-Kars railway, which is going to be launched soon. The sea infrastructure will be moved closer to the railway one. The trail train will be brought from China to try the new railway route. Improvement of infrastructure already brings its fruit. The volume of cargo transportation through TRACECA has started growing, but it is also important to strengthen the result.

Some forgotten projects suddenly come to life. It turns out then that there were more political factors, than economic ones in them. At the recent Russian-Azerbaijani economic forum in Baku Russian representatives spoke about the North-South corridor and expressed concern about the fact that construction of 172-km-long Resht-Astara railway is going slow. Importance of the railway has been emphasized and Russia expressed its readiness to provide technological assistance for its construction. Construction of the North-South corridor is under discussion for many years. The issue of creation of a joint company between Russia, Azerbaijan and Iran to implement the project was brought up several years ago. Kazvin-Resht road has been already built and Iran explains its position with the fact that creation of a joint company is contrary to its legislation. Azerbaijan expresses interest in this project. Political problems around Iran have led to the fact that the project was postponed, Our government acted adequately and switched its attention to implementation of the transport corridor towards the west. A wide-scale renovation of the railway to Georgia, which is tied up to the launching of the Tbilisi-Kars railway, is a confirmation. Meanwhile, Azerbaijan states that it is ready to reconstruct the railway to the south (in particular, move section of the road away from the sea), if interest in the North-South corridor revives.

Despite criticism of the government, attention to the infrastructural development brings results. One should mention the water economy, in which the Turkish specialists are involved. The works for development of new pipelines and sewage systems have revived. Moreover, the company said that mass introduction of smart meters made in Turkey is going to start and in the coming months it is planned to collect 100% fees for water usage. Such hidden changes are optimistic. The same could be said about giving ratings to the state companies. This is dictated not only with the intention to reach the exchanges, but with the necessity to borrow money at the capital markets. Railway has become the third big state company, which got Fitch rating. It had to give an account of its incomes and expenses last year.

Parliament has just passed the Town Planning Code and this great event. But it should be secured by another legislative acts, such as Construction Code. The general plan of Baku is ready and it is not ruled out that it will be even put for public discussion. During discussions in parliament none of the deputies mentioned construction of a parking lot near the Fountain Square. This is one of the best squares in Baku and it has various architectural styles. The new parking lot could ruin integrity of this beautiful part of the city and it is surprise that nobody has reacted. The same thing was observed even earlier. Construction of an ugly shopping centre behind Nasimi monument could be explained with disrespect to the name of great poet. Such decisions kill tourist attractiveness of the capital.