Identifier
Created
Classification
Origin
07BAKU1338
2007-11-08 05:01:00
UNCLASSIFIED
Embassy Baku
Cable title:
AZERBAIJAN COMMERCIAL UPDATE, OCTOBER 15-30, 2007
how-toVZCZCXRO1028 RR RUEHDBU RUEHLN RUEHVK RUEHYG DE RUEHKB #1338/01 3120501 ZNR UUUUU ZZH R 080501Z NOV 07 FM AMEMBASSY BAKU TO RUEHC/SECSTATE WASHDC 4193 INFO RUCNCIS/CIS COLLECTIVE RUEHAK/AMEMBASSY ANKARA 2441 RUCPDOC/DEPT OF COMMERCE WASHDC RUEATRS/DEPT OF TREASURY WASHDC RUEKDIA/DIA WASHDC RUEAIIA/CIA WASHINGTON DC RHEBAAA/DEPT OF ENERGY WASHDC RUEHBS/USEU BRUSSELS
UNCLAS SECTION 01 OF 03 BAKU 001338
SIPDIS
SIPDIS
DEPT FOR EUR/CARC
DEPT PASS TO TDA FOR STEIN, EXIM FOR GLAZER
ANKARA FOR FCS
E.O. 12958: N/A
TAGS: ECON EINV ETRD ENRG EFIN AJ
SUBJECT: AZERBAIJAN COMMERCIAL UPDATE, OCTOBER 15-30, 2007
UNCLAS SECTION 01 OF 03 BAKU 001338
SIPDIS
SIPDIS
DEPT FOR EUR/CARC
DEPT PASS TO TDA FOR STEIN, EXIM FOR GLAZER
ANKARA FOR FCS
E.O. 12958: N/A
TAGS: ECON EINV ETRD ENRG EFIN AJ
SUBJECT: AZERBAIJAN COMMERCIAL UPDATE, OCTOBER 15-30, 2007
1. SUMMARY: This information is drawn primarily from the
Azerbaijani local press, and has not been checked for
accuracy. The opinions and policies expressed in this report
are those of the authors, not the U.S. Government. END
SUMMARY.
--NEW BAKU INTERNATIONAL SEAPORT
--AIC EXPANDING PORTFOLIO
--AZERBAIJAN UNAFFECTED BY GLOBAL CREDIT CRISIS
--EBRD - UNIBANK FINANCING WORTH USD 35 MILLION
--EBRD POWER PLANT PROJECT
--AZERBAIJAN GDP TO INCREASE 18.2 PERCENT IN 2008
--EBRD - UNIBANK FINANCING WORTH USD 35 MILLION
--GOAJ EXPECTS 13 PERCENT DROP IN INVESTMENT IN 2008
--AZERBAIJAN MANAT APPRECIATION
--GOAJ CHANGES PROCEDURE OF STATE PROCUREMENT TENDERS
--OIL PRODUCTION TO INCREASE 40 PERCENT
--RUSSIA INTERRUPTED GRAIN SUPPLIES TO AZERBAIJAN
--SOFAZ RECEIVES ZYKH AND GOVSAN BONUS
--AIC ANNOUNCES A TENDER FOR ITS BALANCE-SHEET AUDIT
--TENDER FOR PHARMACEUTICALS, BANDAGE AND MATERIALS
--TENDER FOR REHABILITATION OF IRRIGATION SYSTEM
--DEFENSE MINISTRY TENDER
2. NEW BAKU INTERNATIONAL SEAPORT
--------------
The initial study and assessment for the new Baku
International Trade Seaport in the Alat district has been
completed. The working group has already started designing a
map of the site. The Transport Ministry announced that the
feasibility study is expected to be completed by
mid-December. South Korea's GS Engineering and Construction
sent the final draft of a new port to the Transport Ministry
on September 3. Relocation of the port will be implemented
in three phases: 2008-2011, 2011-2013 and 2012-2015 and will
cost around USD 396 million. There will be 11 berths, of
which 6 will be constructed at the first phase. The capacity
of the port will be 11.6 million tons of cargo by 2015.
There are unofficial reports that GS Engineering and
Construction has already been awarded the construction
contract for the new port.
3. AIC EXPANDING PORTFOLIO
--------------
Heydar Babayev, Minister of Economic Development has
announced the GOAJ's readiness to continue supporting the
Azerbaijan Investment Company (AIC) by providing more
financial resources to the company. AIC is currently looking
into 50 different projects and plans to utilize around AZN 90
million by the end of 2007. AIC is preparing to be a founder
of two investment companies with the Islamic Development Bank
and Kuwait Financial House.
4. AZERBAIJAN UNAFFECTED BY GLOBAL CREDIT CRISIS
-------------- --
The National Bank of Azerbaijan (NBA) continues to monitor
Azerbaijan's financial stability. The director of the NBA
Research & Statistics Department, Emin Huseynov said
according to the Bank's Financial Stability Committee, the
global credit crisis has had an insignificant effect on
Azerbaijan's financial sustainability.
5. EBRD POWER PLANT PROJECT
--------------
The European Bank of Reconstruction and Development (EBRD)
and the Government of Azerbaijan have signed an agreement to
provide a USD 92 million loan to the Azerbaijan power
generation company, Azerenerji, to finance the rehabilitation
of the AzDRES thermal power plant, the largest power plant in
Azerbaijan with a capacity of 2,400 MW. The loan will be
used to finance a recently signed contract between the
state-owned power company Azerenerji and China National
Electric Equipment Corporation (CNEEC) to improve the plant's
reliability, efficiency, health and safety conditions and to
reduce carbon dioxide emissions. The financing complements an
initial USD 115 million loan by the EBRD signed in November
2006.
BAKU 00001338 002 OF 003
6. AZERBAIJAN GDP TO INCREASE 18.2 PERCENT IN 2008
-------------- --------------
Heydar Babayev, Minister of Economic Development, has
announced that due to the increase in the world oil prices,
Azerbaijan's real GDP growth for 2008 will make increase 18.2
percent. Azerbaijan's GDP grew at 36 percent in 2006 and the
latest expectation is 29 percent for 2007.
7. EBRD - UNIBANK FINANCING WORTH USD 35 MILLION
-------------- ---
The European Bank for Reconstruction and Development (EBRD)
and Azerbaijan's Unibank have signed an agreement for a
syndicated loan worth USD 35 million. The syndicate includes
Anglo-Romanian Bank Limited, RZB Group, State
Bank of India, VTB Bank Europe, Indover Bank, Wachovia Bank,
Chinatrust Commercial Bank, Land Bank of Taiwan, Offshore
Banking Branch, National City Bank, Banco Efisa, Banque de
Commerce et de Placements, DHB Bank, Hipoteku
Banka, and Credit Europe Bank (Suisse). This is the third
loan the EBRD has organized for Unibank.
8. GOAJ EXPECTS 13 PERCENT DROP IN INVESTMENT IN 2008
-------------- --------------
The GOAJ forecasts a 12.9 percent drop in investment next
year to USD 7 billion. Domestic investment is forecasted to
total USD 5 billion, up 6.1 percent, and foreign investment
is forecast to drop to USD 2.1 billion, a decrease of 38.9
percent. Total investment for 2007 is forecast at USD 8.2
billion, up 14.9 percent from 2006.
9. AZERBAIJAN MANAT APPRECIATION
--------------
The Government of Azerbaijan expects the Azerbaijani manat to
appreciate of 5 percent per year until 2012. In 2005, the
manat appreciated 4.3 percent and in 2006 it appreciated 2006
versus the U.S. dollar. The government expects the manat to
gain 5 percent in 2007.
10. GOAJ CHANGES PROCEDURE OF STATE PROCUREMENT TENDERS
-------------- --------------
The Azerbaijan State Procurement Agency (ASPA) plans to amend
legislation on tender procedures. The initiative is linked
with introduction of a pilot computerized procurement system
to operate through the ASPA website www.tender.gov.az. The
system of e-purchases will make the selection of contractors
on goods, works and services more efficient and transparent.
Annually, the country conducts about 6,000 state purchases.
In 2006, overall amount of the signed contracts for purchases
reached USD 2.24 billion.
11. OIL PRODUCTION TO INCREASE 40 PERCENT BY 2011
-------------- --------------
GOAJ forecasts oil production in Azerbaijan to total 62.8
million tons in 2011, up 40 percent from 2007 production
estimates. Oil production by the State Oil Company of the
Azerbaijani Republic (SOCAR) in 2011 is forecasted at 8.6
million tons, down 2.3 percent from 2007. Azerbaijan
International Operating Company (AIOC),the operator for the
Azeri-Chirag-Gunashli project, will increase production by
55.2 percent to 54.204 million tons in 2011. The government
said oil production in 2008 would total 52.131 million tons,
61.011 million tons in 2009, and 63.395 million tons in 2010.
AIOC will account for the growth, producing 43.381 million
tons in 2008, 52.311 million tons in 2009, and 54.745 million
tons in 2010. SOCAR production will begin to drop in 2008 and
will total 8.75 million tons, 8.7 million tons in 2009, and
8.65 million tons in 2010.
12. RUSSIA INTERRUPTED GRAIN SUPPLIES TO AZERBAIJAN
-------------- --------------
Russian producers have interrupted grain supplies to
Azerbaijan, according to Minister of Economic Development
Heydar Babayev. This is due to Russia's plans to introduce
BAKU 00001338 003 OF 003
export dues for grain at the amount of EUR 22 per ton.
Azerbaijan currently purchases the bulk of its grain from
Kazakhstan.
13. SOFAZ RECEIVES ZYKH AND GOVSAN BONUS
--------------
On November 6 The Azerbaijani State Oil Fund received a bonus
payment of USD 2 million from RUSSNEFT Apsheron Investments
Limited in accordance with the Agreement signed between
Azerbaijan Government and extractive company on the
rehabilitation, development and production sharing for the
block including the Zykh and Govsany oil fields.
14. AIC ANNOUNCES A TENDER FOR ITS BALANCE-SHEET AUDIT
-------------- --------------
The Azerbaijan Investment Company plans to announce a tender
for its first financial statement audit. The audit will
cover AIC activity from October to December 2006 and entire
2007. The auditor is also to analyze Company's investment
portfolio.
15. TENDER FOR PHARMACEUTICALS, BANDAGE AND MATERIALS
-------------- --------------
The Center for Innovation and Equipment of the Ministry of
Health of Azerbaijan) has announced a tender for the
procurement of pharmaceuticals, bandage and materials for
medical institutions under the Health Ministry. The tender
consists of 12 lots as follows: drugs for patients with
kidney problems; medication for hemophilia thalassemia
patients; pharmaceuticals for blood donation and blood
components; medicines for diabetes patients; drugs and serum
for immunoprophylaxis of infectious diseases; chemical
agents, nutrients, laboratory and diagnostic appliances,
means for disinfection, disinfestations and deratization;
drugs for concession group patients; the most required
medicines for treatment and preventive treatment; narcotic
analgesics for anaesthesia, neuromuscular relaxants,
psychotropic drugs; medical oxygen and liquid nitrogen. For
additional details see www.tender.gov.az.
16. TENDER FOR REHABILITATION OF IRRIGATION SYSTEM
-------------- --------------
The State Melioration and Water Economy Agency of Azerbaijan
has announced a tender for the rehabilitation of an
irrigation system along Mil-Mughan, one of the major
collectors in mid-Azerbaijan, as specified in a credit
agreement between the Government of Azerbaijan and the World
Bank. The Bank has lent USD 42 million loan for the project,
which covers 86,000 hectares of irrigated area along
Samur-Absheron canal and 36,500 hectares along Mil-Mugan
collector. For additional details see www.tender.gov.az.
17. DEFENSE MINISTRY TENDER
--------------
Defense Ministry has announced a tender for the design and
construction of two eight-story buildings. Applicants must
submit their proposals in writing and other required
documents. The participation fee is USD 1,200 (1,000 AZN).
Deadline for submitting proposals is November 8, 2007, 3 p.m.
Address: Baku, Bayil settlement, F. Khoshginabi Street. Work
schedule, tender offers, and bank guarantee will be submitted
by November 21, 2007, 3 p.m. The selection procedure will
take place on November 22, 2007. Contact persons:
S.Bakhshiyev, V.Nagiyev (994-12 439-49-43). For additional
details see www.tender.gov.az.
DERSE
SIPDIS
SIPDIS
DEPT FOR EUR/CARC
DEPT PASS TO TDA FOR STEIN, EXIM FOR GLAZER
ANKARA FOR FCS
E.O. 12958: N/A
TAGS: ECON EINV ETRD ENRG EFIN AJ
SUBJECT: AZERBAIJAN COMMERCIAL UPDATE, OCTOBER 15-30, 2007
1. SUMMARY: This information is drawn primarily from the
Azerbaijani local press, and has not been checked for
accuracy. The opinions and policies expressed in this report
are those of the authors, not the U.S. Government. END
SUMMARY.
--NEW BAKU INTERNATIONAL SEAPORT
--AIC EXPANDING PORTFOLIO
--AZERBAIJAN UNAFFECTED BY GLOBAL CREDIT CRISIS
--EBRD - UNIBANK FINANCING WORTH USD 35 MILLION
--EBRD POWER PLANT PROJECT
--AZERBAIJAN GDP TO INCREASE 18.2 PERCENT IN 2008
--EBRD - UNIBANK FINANCING WORTH USD 35 MILLION
--GOAJ EXPECTS 13 PERCENT DROP IN INVESTMENT IN 2008
--AZERBAIJAN MANAT APPRECIATION
--GOAJ CHANGES PROCEDURE OF STATE PROCUREMENT TENDERS
--OIL PRODUCTION TO INCREASE 40 PERCENT
--RUSSIA INTERRUPTED GRAIN SUPPLIES TO AZERBAIJAN
--SOFAZ RECEIVES ZYKH AND GOVSAN BONUS
--AIC ANNOUNCES A TENDER FOR ITS BALANCE-SHEET AUDIT
--TENDER FOR PHARMACEUTICALS, BANDAGE AND MATERIALS
--TENDER FOR REHABILITATION OF IRRIGATION SYSTEM
--DEFENSE MINISTRY TENDER
2. NEW BAKU INTERNATIONAL SEAPORT
--------------
The initial study and assessment for the new Baku
International Trade Seaport in the Alat district has been
completed. The working group has already started designing a
map of the site. The Transport Ministry announced that the
feasibility study is expected to be completed by
mid-December. South Korea's GS Engineering and Construction
sent the final draft of a new port to the Transport Ministry
on September 3. Relocation of the port will be implemented
in three phases: 2008-2011, 2011-2013 and 2012-2015 and will
cost around USD 396 million. There will be 11 berths, of
which 6 will be constructed at the first phase. The capacity
of the port will be 11.6 million tons of cargo by 2015.
There are unofficial reports that GS Engineering and
Construction has already been awarded the construction
contract for the new port.
3. AIC EXPANDING PORTFOLIO
--------------
Heydar Babayev, Minister of Economic Development has
announced the GOAJ's readiness to continue supporting the
Azerbaijan Investment Company (AIC) by providing more
financial resources to the company. AIC is currently looking
into 50 different projects and plans to utilize around AZN 90
million by the end of 2007. AIC is preparing to be a founder
of two investment companies with the Islamic Development Bank
and Kuwait Financial House.
4. AZERBAIJAN UNAFFECTED BY GLOBAL CREDIT CRISIS
-------------- --
The National Bank of Azerbaijan (NBA) continues to monitor
Azerbaijan's financial stability. The director of the NBA
Research & Statistics Department, Emin Huseynov said
according to the Bank's Financial Stability Committee, the
global credit crisis has had an insignificant effect on
Azerbaijan's financial sustainability.
5. EBRD POWER PLANT PROJECT
--------------
The European Bank of Reconstruction and Development (EBRD)
and the Government of Azerbaijan have signed an agreement to
provide a USD 92 million loan to the Azerbaijan power
generation company, Azerenerji, to finance the rehabilitation
of the AzDRES thermal power plant, the largest power plant in
Azerbaijan with a capacity of 2,400 MW. The loan will be
used to finance a recently signed contract between the
state-owned power company Azerenerji and China National
Electric Equipment Corporation (CNEEC) to improve the plant's
reliability, efficiency, health and safety conditions and to
reduce carbon dioxide emissions. The financing complements an
initial USD 115 million loan by the EBRD signed in November
2006.
BAKU 00001338 002 OF 003
6. AZERBAIJAN GDP TO INCREASE 18.2 PERCENT IN 2008
-------------- --------------
Heydar Babayev, Minister of Economic Development, has
announced that due to the increase in the world oil prices,
Azerbaijan's real GDP growth for 2008 will make increase 18.2
percent. Azerbaijan's GDP grew at 36 percent in 2006 and the
latest expectation is 29 percent for 2007.
7. EBRD - UNIBANK FINANCING WORTH USD 35 MILLION
-------------- ---
The European Bank for Reconstruction and Development (EBRD)
and Azerbaijan's Unibank have signed an agreement for a
syndicated loan worth USD 35 million. The syndicate includes
Anglo-Romanian Bank Limited, RZB Group, State
Bank of India, VTB Bank Europe, Indover Bank, Wachovia Bank,
Chinatrust Commercial Bank, Land Bank of Taiwan, Offshore
Banking Branch, National City Bank, Banco Efisa, Banque de
Commerce et de Placements, DHB Bank, Hipoteku
Banka, and Credit Europe Bank (Suisse). This is the third
loan the EBRD has organized for Unibank.
8. GOAJ EXPECTS 13 PERCENT DROP IN INVESTMENT IN 2008
-------------- --------------
The GOAJ forecasts a 12.9 percent drop in investment next
year to USD 7 billion. Domestic investment is forecasted to
total USD 5 billion, up 6.1 percent, and foreign investment
is forecast to drop to USD 2.1 billion, a decrease of 38.9
percent. Total investment for 2007 is forecast at USD 8.2
billion, up 14.9 percent from 2006.
9. AZERBAIJAN MANAT APPRECIATION
--------------
The Government of Azerbaijan expects the Azerbaijani manat to
appreciate of 5 percent per year until 2012. In 2005, the
manat appreciated 4.3 percent and in 2006 it appreciated 2006
versus the U.S. dollar. The government expects the manat to
gain 5 percent in 2007.
10. GOAJ CHANGES PROCEDURE OF STATE PROCUREMENT TENDERS
-------------- --------------
The Azerbaijan State Procurement Agency (ASPA) plans to amend
legislation on tender procedures. The initiative is linked
with introduction of a pilot computerized procurement system
to operate through the ASPA website www.tender.gov.az. The
system of e-purchases will make the selection of contractors
on goods, works and services more efficient and transparent.
Annually, the country conducts about 6,000 state purchases.
In 2006, overall amount of the signed contracts for purchases
reached USD 2.24 billion.
11. OIL PRODUCTION TO INCREASE 40 PERCENT BY 2011
-------------- --------------
GOAJ forecasts oil production in Azerbaijan to total 62.8
million tons in 2011, up 40 percent from 2007 production
estimates. Oil production by the State Oil Company of the
Azerbaijani Republic (SOCAR) in 2011 is forecasted at 8.6
million tons, down 2.3 percent from 2007. Azerbaijan
International Operating Company (AIOC),the operator for the
Azeri-Chirag-Gunashli project, will increase production by
55.2 percent to 54.204 million tons in 2011. The government
said oil production in 2008 would total 52.131 million tons,
61.011 million tons in 2009, and 63.395 million tons in 2010.
AIOC will account for the growth, producing 43.381 million
tons in 2008, 52.311 million tons in 2009, and 54.745 million
tons in 2010. SOCAR production will begin to drop in 2008 and
will total 8.75 million tons, 8.7 million tons in 2009, and
8.65 million tons in 2010.
12. RUSSIA INTERRUPTED GRAIN SUPPLIES TO AZERBAIJAN
-------------- --------------
Russian producers have interrupted grain supplies to
Azerbaijan, according to Minister of Economic Development
Heydar Babayev. This is due to Russia's plans to introduce
BAKU 00001338 003 OF 003
export dues for grain at the amount of EUR 22 per ton.
Azerbaijan currently purchases the bulk of its grain from
Kazakhstan.
13. SOFAZ RECEIVES ZYKH AND GOVSAN BONUS
--------------
On November 6 The Azerbaijani State Oil Fund received a bonus
payment of USD 2 million from RUSSNEFT Apsheron Investments
Limited in accordance with the Agreement signed between
Azerbaijan Government and extractive company on the
rehabilitation, development and production sharing for the
block including the Zykh and Govsany oil fields.
14. AIC ANNOUNCES A TENDER FOR ITS BALANCE-SHEET AUDIT
-------------- --------------
The Azerbaijan Investment Company plans to announce a tender
for its first financial statement audit. The audit will
cover AIC activity from October to December 2006 and entire
2007. The auditor is also to analyze Company's investment
portfolio.
15. TENDER FOR PHARMACEUTICALS, BANDAGE AND MATERIALS
-------------- --------------
The Center for Innovation and Equipment of the Ministry of
Health of Azerbaijan) has announced a tender for the
procurement of pharmaceuticals, bandage and materials for
medical institutions under the Health Ministry. The tender
consists of 12 lots as follows: drugs for patients with
kidney problems; medication for hemophilia thalassemia
patients; pharmaceuticals for blood donation and blood
components; medicines for diabetes patients; drugs and serum
for immunoprophylaxis of infectious diseases; chemical
agents, nutrients, laboratory and diagnostic appliances,
means for disinfection, disinfestations and deratization;
drugs for concession group patients; the most required
medicines for treatment and preventive treatment; narcotic
analgesics for anaesthesia, neuromuscular relaxants,
psychotropic drugs; medical oxygen and liquid nitrogen. For
additional details see www.tender.gov.az.
16. TENDER FOR REHABILITATION OF IRRIGATION SYSTEM
-------------- --------------
The State Melioration and Water Economy Agency of Azerbaijan
has announced a tender for the rehabilitation of an
irrigation system along Mil-Mughan, one of the major
collectors in mid-Azerbaijan, as specified in a credit
agreement between the Government of Azerbaijan and the World
Bank. The Bank has lent USD 42 million loan for the project,
which covers 86,000 hectares of irrigated area along
Samur-Absheron canal and 36,500 hectares along Mil-Mugan
collector. For additional details see www.tender.gov.az.
17. DEFENSE MINISTRY TENDER
--------------
Defense Ministry has announced a tender for the design and
construction of two eight-story buildings. Applicants must
submit their proposals in writing and other required
documents. The participation fee is USD 1,200 (1,000 AZN).
Deadline for submitting proposals is November 8, 2007, 3 p.m.
Address: Baku, Bayil settlement, F. Khoshginabi Street. Work
schedule, tender offers, and bank guarantee will be submitted
by November 21, 2007, 3 p.m. The selection procedure will
take place on November 22, 2007. Contact persons:
S.Bakhshiyev, V.Nagiyev (994-12 439-49-43). For additional
details see www.tender.gov.az.
DERSE