Azerbaijan is pushing ahead with economic diversification plans to smooth out the effects of commodity price volatility, while regional and domestic mega projects look to put the country on the investment map.
Azerbaijan's economy has cooled down from the giddy days of 34.5% growth recorded in 2006, as the first oil revenues started to flow into the economy. GDP growth at constant prices maintained a strong trend in the years following, coming in at 25% in 2007, then slowing to а more controllable 10.8% in 2008, and 9.3% in 2009. As growth slowed in the oil sector, as much a cause of reduced investment flows as it was to the lower oil price recorded over 2009, the non-oil sector has been seen to pick up the slack, with growth in ICT services particularly notable. GDP in PPP terms came in at $91 billion in 2010 - a growth rate of 3.7% - as a result of the cooling oil price.
Over the period of 2008-2009, several non-export sectors posted double-digit growth, spurred on by expansion in the construction, real estate, and banking sectors. It is on this base that the authorities in Azerbaijan wish to build. Between January and June 2011, GDP grew 0.9% — slower than the growth rate experienced over the same period in 2010. "Our main goal is to develop the non-oil sector and diversify the economy," commented President Ilham Aliyev, adding that "7.2% growth was achieved in non-oil economy in the first six months of , with 6.2% growth reported in agriculture." Despite the drive, however, challenges remain in attracting more FDI to the country, with the 2010 total coming in at $3.35 billion. More importantly than simply attracting FDI, it is into what sectors that the FDI is flowing that is becoming of importance to the government.
In 2010 Azerbaijan's total imports came in at $6.5 billion, paling in comparison to its exports, which were posted at $21.31 billion, 85% of which were petroleum exports. While trade with Russia still remains high, it is declining in the overall mix as ties build with neighboring Turkey as well as European nations. In that regard, the proposed Nabucco pipeline represents a significant opportunity for Azerbaijan to export its natural gas resources to Europe, not only boosting revenues but also providing for Europe's energy security, something which is almost certain to foster closer economic ties between Azerbaijan and the European bloc.
Aside from spending on economic diversification, the record $20 billion budget that the country boasts after an amendment in 2011, as well as the strategic currency reserves of up to $38 billion, have allowed the government to increase its focus on solving social issues. According to the authorities, average incomes increased 17% over the first six months of 2011, while pensions increased 40%. A state rural development program has also seen the creation of 38,000 jobs so far in 2011. Unemployment currently stands at 0.9%, while the population considered below the poverty line was approximately 11% according to 2009 estimates. Inflation also continues its decline, reaching 5.1% in 2010, as the Central Bank of Azerbaijan looks to sterilize the effects of large-scale capital inflows into the economy.
Growth & Diversification
Diversification has been а key part of Azerbaijan's national strategy since 1991, and efforts over the last few years seem to be beginning to pay off. Using the prime oil and gas industry as a base, growth in the chemical industry was 34.2% in 2010, while the manufacturing equipment sector increased 7.9%, metallurgy grew 23.3%, and growth of 8.4% was seen in oil processing. Plans for the establishment of new oil and chemistry complexes have been drawn up, and "Comprehensive reforms in these areas will enable Azerbaijan to export oil, chemical, and industrial products in bigger volumes in the future," Natiq Aliyev, Minister of Industry and Energy, told TBY.
Other growth sectors include ICT, with President Ilham Aliyev telling TBY, "ICT is also considered to be the most important long-term growth segment of Azerbaijan's economy." The communications sector alone came in at 2% of GDP in 2010, and is growing in importance. In 2010 the sector grew at an astounding rate of 29.7%. IT is also on the up, with approximately 50% of the population now internet users, and one in 15 is said to own a computer, up from one per 1,000 several years ago.
Agriculture is another sector that is mak-ing its mark, representing 5% of GDP in 2010. A trend toward agribusiness has seen the agriculture industry gain importance of late, and it has also been designated as a priority sector. То support the sector and support much important entrepreneurs, tax holidays and exemptions have been granted to both local and foreign companies. Furthermore, VAT and customs duty exemptions have been introduced on equipment and machinery, as well as subsidies on fertilizers, fuel, seeds, and machinery.
Development in the tourism sector also echoes the overall development policy of the authorities. "The government has allocated fundamental investments for the formation of a modern tourism infrastructure, but hotels are constructed by the private sector", President Aliyev told TBY. The Ministry of Tourism and Culture is targeting 3 million visitors in the near future, and the opening of several new five-star hotels, as well as Azerbaijan's victory at the 2011 Eurovision Song Contest in Düsseldorf, Germany, look set to increase the country's standing as a must-see destination.
Further sectors designated as key areas for FDI by AZPROMO include alternative energy services, transportation and logistics, construction, the chemical industry, and light industry. Total FDI stock between 1995 and 2010 stood at $54.5 billion, and changing the global perception of the country is key to increasing the figure. In 2010 Standard & Poor's improved the long-term credit rating of Azerbaijan to BBB, and Azerbaijan was given Investment Grade status by Fitch Ratings. "All the economic achievements in Azerbaijan are, obviously, being noticed by international financial organizations", Adil A. Mammadov, President of AZPROMO, told TBY.
Regional trade & Beyond
While Azerbaijan is fostering regional relations and trade through mega projects such as the Baku-Tbilisi-Kars (ВТК) railway, the Europe-Caucasus-Asia (TRACECA) highway, and the International Sea Trade Port, it is also keeping a wide base of import and export partners. Its biggest export markets in 2010 were Italy, at 35%, Israel and France, at 9%, the US, at 8%, and Ukraine, at 5%. Its largest import partner was Russia, at 18%, Turkey, at 12%, then Germany, at 10%, and China, at 9%. The main export categories were raw oil and petrochemicals, fruit and vegetables, plant and animal oil, ferrous metals and products, chemical industry products, cotton, aluminum and products, alcoholic and non-alcoholic beverages, and tobacco. At the same time, major imports were machinery and equipment, vehicles and spare parts, foodstuffs, non-ferrous metals and products, pharmaceuticals, and wood and its by products.
The ВТК railway is a sign that Azerbaijan is also finally looking to leverage its position as a hub between Europe and Asia. In comments made to ТВУ, Mikheil Saakashvili, President of Georgia, said that "The Baku-Tbilisi (Akhalkalaki)-Kars railway project signals а geopolitical transformation in our region because a completely new strategic link is opening not only between Georgia, Azerbaijan, and Turkey, but also Central Asia, China, and Europe", later commenting that while it " will take several hundreds of millions of dollars worth of investment", in the future it "will bring in revenue worth billions".
Relations with Russia also remain warm, despite competing interests regarding Nabucco and Europe's energy security. "Our countries are big players in the energy sector and we have many common interests because we both produce and supply energy resources. We therefore need to reach agreements in this sector, and we need to cooperate." Dmitry Medvedev, President of the Russian Federation commented to TBY.
While trade with Russia and other former Soviet states is declining in importance, Europe and Turkey are growing in economic significance for Azerbaijan. Longterm prospects, however, hinge on world oil prices, and the location of new oil and gas pipelines.
The land of Azerbaijan is so potent with oil that the hydrocarbons hit the senses upon arrival. It is no surprise that Azerbaijan owes its riches to its plentiful natural resources, and its rate of growth shows no sign of slowing. As one of the world's oldest oil producers, Azerbaijan has а rich history with "black gold". Evidence shows oil was being used for energy in the 3rd and 4th centuries AD, with the first recorded production boom in 1871. While oil production slowed dramatically during the Soviet years, the industry took leaps forward in 1994, when President Heydar Aliyev signed the "Contract of the Century" with BP and the other international part-ners in the Azerbaijan International Operating Company (AIOC) consortium. The 30-year deal transformed the industry in Azerbaijan and set the country on its way to substantial economic development.
Furthermore, its plentiful resources coupled with its geostrategic position catapulted the Southern Caucasus country onto the international stage. Both the EU and Russia vie for the energy security that Azerbaijan's resources can provide, placing it in a substantially powerful position. In addition, its position as a transit country for gas from the other side of the Caspian only increases its status.
The agreement between the Azerbaijani government and international oil companies — most notably BP — in 1994 has quite rightly been dubbed the Contract of the Century. While Azerbaijan was a world leader in oil production in the 1900s, the recently independent coımtry needed technical help and financial muscle to rediscover and export its oil and gas resources in the Caspian Sea. President Heydar Aliyev signed the contract on September 20, 1994, which included a number of caveats to assist Azerbaijan's development. Since then, 20 production-sharing agreements (PSAs) have been signed.
The State Oil Company of Azerbaijan Republic (SOCAR) is one of the largest oil companies in the world. SOCAR has 57 oil fields, 18 of which are offshore in the Caspian, with the rest onshore. It is estimated that the Caspian basin has 30 billion tons of oil and 18-20 trillion cubic meters of gas, which comprises 15% of the world's carbon-hydrogen resources. The company currently holds 40% of the deal's share, but organization President Rovnag Abdullayev has said the company would buy part of the share of the US Devon Energy company, which would leave SOCAR with the biggest share ahead of BP.
The Azeri-Chirag-Guneshli (ACG) field has produced a staggering amount of oil for the country and has set the Azerbaijani oil industry on fire. Together with SOCAR, the AIOC includes BP, Statoil, Total, Chevron, Amerada Hess, TPAO, Inpex, Itochu, ExxonMobil, and Devon Energy. The ACG Oil Project is designed to further develop the Chirag and deepwater Gımeshli fields. The final investment decision on the $6 billion project was made in March 2010. Production is scheduled to begin in 2013.
The AIOC produces and develops offshore crude oil reserves in the Caspian Sea from the ACG Field. The original total production was 125,000 bbl/d in 1997 and this has risen to an average total daily crude oil production of 822,000 barrels (28,000 net) in 2010.
The Chirag oilfield is scheduled to come on stream in late 2013, which will provide a boost to oil production from 2014. Growth will also be supported by increasing investment in the hydrocarbons sector, which will be necessary as preparations for the second phase of the Shah Deniz project, which is expected to come on stream in 2016-17.
Shah Deniz is one of the world's largest gas fields, with estimated reserves of well over 30 trillion cubic feet, or 1 trillion cubic meters, of gas condensate in place. The field, which includes Shah Deniz I and II, is located approximately 70 km. southeast of Baku on the deep-water shelf of the Caspian Sea. The BP operated field lies in water depths ranging from 50 to 550 meters.
The first phase of the project started up in 2006, after discovery in 1999, with the maximum rate of production expected to be 8.6 billion cubic meters of gas per annum (bcma) and approximately 50,000 barrels a day of condensate. The project has taken just seven years to get up and running and has proved a secure and reliable supplier of gas to Azerbaijan, Georgia, and Turkey. However, it is the second phase of the projectfull field development — that is most exciting. The next step seeks to ımcover the possibility to produce an additional 16 bcma, 100,000 barrels of condensate, and supply the Nabucco pipeline, thus easing Europe's energy security concerns.
THE LEFTOVERS The newest kid on the block is the Shafag-Asiman field, which is estimated to hold 500 billion cubic meters of condensate gas. A memorandum of understanding (MoU) was signed in October 2010 between SOCAR and BP. The unexplored block lies in deep water of about 650-800 meters, with reservoir depth of about 7,000 meters, some 125 kilometers southeastof Baku and covers an area of 1,100 square meters. Under the PSA, set to last 30 years, BP Exploration (Azerbaijan) Limited will be the operator with а 50% interest, while SOCAR will hold the remaining 50% equity.
Located 55 kilometers south of Baku, the Sangachal Terminal is a vital link in Azerbaijan's oil and gas industry. The BP operated terminal receives, processes, stores, and exports crude oil and gas produced from Azerbaijan's offshore oilfields in the Caspian Sea. It is one of the world's largest oil and gas terminals, and consists of two main parts: the Early Oil Project (EOP); and Sangachal Terminal Expansion Program (STEP). The EOP terminal has been constructed to process, store, and export oil from the Chirag offshore field in the Caspian. The EOP terminal houses four crude oil storage tanks at 25,500 cubic meters each, and can process, store, and export in excess of 6 million tons of crude oil per year. STEP is the part of the terminal that has been expanded to receive, store, and process oil from the Azeri and Deep-water Gımeshli sections of the ACG f ield and gas from the Shah Deniz field. It houses a numberof facilities including three crude oil storage tanks with 880,000 barrels of capacity each.
The impact of the AIOC's relationship with Azerbaijan is clearly visible. Not only have the partners led the development and operation of the coımtry's biggest fields, they have playeda major role in the training of the local population, building modern industry facilities, sponsoring numerous social projects, and giving technical assistance to public institutions, as per the initial contract. The investments have gener-ated improvements to the country's medicalfacilities, schools, and roads as well as providing training for medical staff and farmers, supplying medical aid to local residents, and offering micro loans to entrepreneurs. Furthermore, the partners have implemented major development initiatives aimed at building skills and capailities in local communities, improving their ccess to social infrastructure, and providing echnical assistance to public institutions.
You would be forgiven if you thought Azerbaijan's oil story was all about BP. The multinaional company has large stakes in the industry, out other international companies are taking ıold of the newly discovered reserves. French company Total (40%) is currently the operator drilling in the Absheron sea block with SOCAR, (40%), and GDF Suez (20%). Total is the operator during the exploration phase and will lead point-venture operations during the developmnent phase. The drilling of an exploration well began in early 2011.
Total has been operating in Azerbaijan since 1996, with production reaching 13,000 bbl/d in 2010 against 12,000 bbl/d in 2009, and 18,000 bbl/d in 2008. The group's production is currently centered on the Shah Deniz field. Total holds 10% of South Caucasus Pipeline Company, the company that owns the South Caucasus Pipeline (SCP), which transports gas from Shah Deniz to the Turkish and Georgian markets. Total also holds 5% of the Baku-Tbilisi-Ceyhan pipeline (BTC), owned by BTC Со., which connects Baku to the Mediterranean Sea.
Statoil has а 25.5% ownership share in the Shah Deniz gas field, which is located in the Caspian Sea southeast of Baku and is Azerbaijan's largest gas resource. Gas from the site is currently transported through the 690-kilometer South Caucasus Pipeline (SCP), which extends to the border between Georgia and Turkey. While peak production from the Shah Deniz Phase 1 is projected at 8.6-9 bcma, gas production will be increased by another 16 bcma during Phase 2. Additionally, Chevron increased its non-operating working interest in AIOC from 10.3 % to 11.3 % in the third quarter of 2010.
Not only does Azerbaijan sit on a wealth of oil and gas, but it lies in a significant geostrategic position for exporting the natural resources of other countries. The SCP is а 1,768 kilometer long crude oil pipeline from the Azeri-Chirag-Guneshli oil field in the Caspian Sea to the Mediterranean Sea. Shareholders in the pipeline include BP (30.1%), AzBTC (25%), Chevron (8.9%), Statoil (8.71%), TPAO (6.53%), ENI (5%), Total (5%), Itochu (3.4%), INPEX (2.5%), ConocoPhillips (2.5%), and Hess (2.36%). It is anticipated that the Nabucco pipeline will branch from the BTC to export condensate gas from Shah Deniz II through Georgia, Turkey, Bulgaria, Romania, and Hungary to Vienna to satisfy the EU's current energy needs. The president of BP in Azerbaijan, Rashid Javanshir, has already annoımced that the company plans to build a new gas pipeline to expand the capacity of the South Caucasus Gas Pipeline (SCGP), which supplies gas from Azerbaijan to Georgia and Turkey. The current capacity of the SCGP is 8 bcma, and BP intends to increase this to 24 bcma. According to BP, the expansion of the pipeline will be necessary so that there is sufficient capacity for gas from the second phase of the Shah Deniz project, which is due to come on stream in 2016-17. In order to соре with the increase in gas production from Shah Deniz Phase 2, BP plans to construct a 400-kilometer pipeline that will run to the Azerbaijani-Georgian border, where it will connect with two large compressors that are to be constmcted in Georgia. The new pipeline will be connected to the existing SCGP. BP estimates that the new pipeline will cost aroımd $3 billion to construct. BP is the largest foreign investor in Azerbaijan. The expansion of the SCGP will increase the gas volumes available to Turkey and Georgia. The pipeline may also form part of the proposed Nabucco pipeline, which has an estimated capacity of 31 bcma.
Once this pipeline is in place, it encourages the construction of a trans-Caspian pipeline to open up easy access to Turkmen, Uzbek, and Kazakh gas. Furthermore, this pipeline would also work in the other direction, opening Azerbaijan's options to export through Afghanistan into Pakistan and then to India as part of the Trans-Afghanistan Pipeline (ТАР or TAPI) proposed by the Asian Development Bank (ADB). While the development of the natural gas pipe-line is primarily intended for transporting gas from Turkmenistan, a trans-Caspian pipeline would open further transit and export possibilities for Azerbaijan.
While Azerbaijan has vast reserves of oil and gas to hand, the country is also blessed with other natural resources. The government is extremely keen to move away from a solely petroeconomy and is making significant ef-forts to diversify. Its geostrategic position lends itself well to being a transit hub for energy — be it oil and gas, nuclear, or renewables. Baku's name is widely believed to be derived from the old Persian names of the city Bäd-kube, meaning "Wind-pounded city", in which bäd means "wind" and kube is rooted in the verb kubidan, "to pound". It may come as no surprise then, that wind power is an option. The coımtry enjoys 260-280 days of sunshine per year, meaning solar power is also a viable investment opportunity. In addition, the region benefits from geothermal waters, especially in Guba, where the water temperature sometimes reaches 90 °C, suitable for geothermal plants.
Azerbaijan's relationship with nuclear power is as yet ımdecided. A plant was planned in Baku and Sumgait, due for completion in 2012; however, this project has been put on hold.
Azerbaijan's electricity network is yet another legacy from the Soviet Union, and one that needs to be upgraded. The authorities have begun to use its hydrocarbon revenue to upgrade the electricity generating and distribution network, as well as the gas distribution network, and there will be substantial opportunities for investors in these sectors in the coming years. Azerbaijan has an installed capacity of around 5,924 MW, consisting of eight thermo-electric plants fuelled mainly with fuel oil (accounting for roughly 80% of generating capacity in 2007), six hydroelectric plants, and five so-called modular plants, all of which are owned by the state. Azerenergy, the state-owned electricity monopoly, announced the opening of а 105-MW thermal-power station in Guba, in the northeast of the country, in September 2009. The station consists of 12 plants with an individual capacity of 8.7 MW and is expected to generate 700 million kW of power each year. Construction of the Shahdag power station was also completed in 2009. The plant has а сараcity of 104 MW. The power station will supply the Guba and Gusar districts, also providing electricity to the Shahdag tourist complex, which is currently under construction. Energy losses via the inefficient distribution netwoık amount to around 20%, and the country is forced to import electricity. This is an ongoing process, however, and Azerbaijan's State Oil Fund (SOFAZ) along with international donors are working to transform the country's system. То demonstrate commitment to both economic diversification and investment in the electricity system, the government is planning to reduce three fold the consumption of traditional fuels for generation of 1 kW of electricity. The strategy aims to make energy consumption more efficient by increasing transmission capacity and installing 110 kV electric networks. Electricity consumption is estimated at 22,018 GW in 2010, an increase of 3.3% compared with the previous year. Growth in electricity consumption is expected to accelerate over the forecast period, driven mainly by industrial growth in and around the oil sector. On average, consumption is expected to grow by 4.2% annually between 2011 and 2020. While Azerenergy has a monopoly on power generation, the national electricity network is divided into five regional grids: Baku, Nakhchivan, North (Sumgait), South (Ali Bayramly), and West (Ganja). Each of the regional grids has been opened to foreign investors by means of open joint-stock companies, and each has been transferred to the private sector using jointstock companies.
Development of non-oil sector
As a result of purposeful and consistent economic policy, country's development has become sustainable in recent years. Thus, the non-oil sector growth by 7.9%, as well as, area of information and communication - 29.7%, transport and storage household - 4.3%, the construction increased by 20.3% in 2010, compared to 2009.
Last year 9.7% increase was recorded in the non-oil industries.
Results of the 2005-2010 - years analysis show that, during this period, beside the overall economic development, the non-oil sector has also sustainable developed and non-oil GDP had relatively stable growth rate.
The real growth rates of GDP and non-oil GDP for 2005-2010 - years are followed in the below schedule
Figure 1. Dynamics of GDP production, %
Investments worth 9715.2 mln. AZN were laid to the fixed capital from all financing sources into development of economic and social sectors of country in 2010 that exceeds the indicators of 2009 by 21,2%. 75.2% of the total amount falls at domestic investments, 24.8% at foreign investments. 69.7% of the total investments directed to fixed capital, had been used in the development of the non-oil section, including 12.2% in the non-oil industry, 30.3% in the oil section.
Results of the analysis for 2005-2010 show that, significant growth has been observed in the private weight of the investments directed to the non-oil sector in the structure of investments made to the economy in recent years.
Figure 2. The dynamics of the investments directed to country's economy, mln. AZN
The volume of goods and services produced in the country's industry by the economic subjects increased by 27.4% to 2.6 billion AZN in 2010 compared to the previous year.
Production of industry products grew by 1,7% in oil sector and 6,6% in non-oil sector.
Non-oil industry shares 9.1% of value added created last year in the non-oil sector. Thus, 6.2% real growth were registered and created 1687.5 million. AZN value adds on non-oil industry in 2010.
75.8% of industrial products were produced in mining section, 19.1% in manufacturing section, 4.5% in electric power, gas, steam and condensate air supply section, 0.6% in water supply, in treatment of dirty water and waste.
50.8 million ton oil and 16.7 billion cubic meters of marketable gas were produced in mining section during 2010.
The production of food products increased by 2.4%, beverage11.8%, processing of wood furniture and wood products industry - 7.5%, paper and paperboard production - 25.5%, printing and transferring of writing data carriers - 10%, oil products - 8.8%, production of chemical products -16.2%, metallurgy industry products - 44.6%, electric equipment production - 82,8%, production of machinery and equipment - 1.9 times, vehicles, trailers and semi-production - 48 , 4 times.
17.6 billion Kw.hours of electric power was produced country's power stations over the year.
Last year, the value of agricultural total output in current prices were 3877.7 million AZN and decreased by 2.2% as well as vegetable products decreased by 8.9%, animal products 6.1%,compared to 2009. Except grain and potatoes products, livestock and crop production increased in comparison with 2009.
2000,9 thousand tons of grain and grain beans products were collected from 966.7 thousand hectares of wheat area (also including corn) in 2010. 1308.9 thousands shades (65,4%) of grain and grain leguminous plants production were autumn and spring wheat, 136.1 thousand (6.8%) tone were maize. Wheat was cultivated in the 660.5 thousand hectares (72,2%) of sown area of autumn grain, while barley were 254.7 thousand hectares (27%). The sown area of wheat increased by 0.2%, sown area of barley grew by 2.2%.compared to the same period of 2009.
953.7 thousand tons of potato, 1181.1 thousand tons of vegetables, 433.5 thousand tons of melons, 256.6 thousand tons of sugar beet, 37.3 thousand tons of cotton, 3.2 tons of tobacco, 729. 3 tons of fruit and berries, 544.9 tons of grapes and 129.5 tons of green tea leaves were gathered from the sown areas in last year.
The number of cattle in the field of livestock and livestock products is dynamic increasing.
There were 2637.4 thousands of cattle, including 1272.8 thousands of cows and buffaloes, 8463.1 thousands of sheep and goats in the country during the reporting period. The number of cattle increased 26.6 thousand, the number of cows and buffaloes - 9.3 thousand, sheep and goats - 53.2 thousand compared to 2009.
Last year, 440 thousand ton of meat in live weight, 1529.2 thousand ton of milk, 15.6 million ton of wool and 1178.6 eggs were produced in the country.
Sustainable development and humanitarian aid
Azerbaijan has experienced unprecedented economic growth over the past five years. On average the economy grew at 20 percent annualized pace, being one of the fastest growing economies in the world. Azerbaijan has significant increases in revenue from oil production, meaning that it will have the resources to finance much of the public investment needed in order for the country to achieve the MDGs by 2015. Available financial resources have provided many opportunities to fund policy measures aimed at poverty reduction and achievement of other MDGs. The Government's primary goal is to spend available funds in the most efficient and transparent way for the good of the present and future generations.
In 2010, the national economy of Azerbaijan has retained its dynamism and as of today, the GDP growth is recorded at almost 5%. Since 2003, the poverty rate dropped from 44 percent to 9.1 percent. The Government of Azerbaijan has substantially developed trade and investment conditions in an effort to strengthen national competitiveness and spur private sector development, especially in the non-oil segment. Non-oil GDP grew at almost 16%, the highest rate in 5 years. In recognition of the results-oriented reforms, ambitious national development strategy and consistent economic policy, Azerbaijan has been recognized as one of the world’s top reformers.
Azerbaijanis determined to contribute to the realization of the development goals and objectives agreed within the United Nations.It demonstrates full support and undertakes ceaseless efforts for eradication of poverty and promotion sustained economic growth, sustainable development and global prosperity for all, paying particular attention to addressing the special needs and vulnerabilities of the developing and least developed countries as well as those recovering from natural disasters. In the last 5 years, Azerbaijan has provided extensive humanitarian assistance to and contributed to the implementation of national development policies and strategies in a number of countries from different regions.
The Government has successful launched and implemented several regional infrastructure projects that made a significant contribution to the development of some neighboring countries. Taking into consideration that, the ICT is considered as a significant instrument in fostering economic growth and competitiveness and contributing to poverty eradication and social inclusion, the Government of Azerbaijan has put forward an initiative to jointly build and manage the Trans-Eurasian Information Super Highway, which is expected to facilitate supplying the countries of the region with internet, telecommunication systems, e-information resources and e-economies.
Significant progress had been achieved in machine building and equipment production, which forms the basis of the non-oil industry. Establishment of automobile plant in Nakhchivan and tractor production in Ganja would play an important role for the increasing demand for transport vehicles. Also ceramic products in Hajigabul, precision engineering and ICT in Shamakhi, electronic equipment factories in Ganja and Mingachevir had been established. Along with these, metal constructions in Garadag, concrete stands in Mingachevir and new plants have been put into production, which produces a wide range of products in regions of the country.
Creation of the appropriate institutions to accelerate the process of industrialisation in the country and expanding their activities play an important role in modern period. Factories equipped with modern technology in newly created Sumgait Technology Park and Sumgait Chemical Industrial Park along with the development of non-oil industry, giving a significant contribution to the diversification of the economy. In addition to these, solid waste sorting and incineration plant had been built in Balakhani (“Temiz Sheher” JSC) and Balakhani Industrial Park established in order to develop recycling in this area.
At the same time, an increase of alternative and renewable energy potential in terms of renewable generators and equipment production is playing an important role for diversification of energy sources, in addition to reduction of emissions in the country. In this regard, solar panels producing plant began operating near Sumgait City.
As part of the industrialisation process, special attention should be paid to the establishment of the defence industry in the country. In a short period of time about 50 new production facilities had been created and production of more than 900 defence products had been organised. In addition to military products, production of civilian goods by the defence enterprises had been increased twice in recent years.
In the past 10 years the light industry had developed as well; textile, furniture and other essential production facilities had been built in Baku, Nakhchivan, Ganja, Sumgait, Yevlakh, Guba and other regions of the country. In the area of food production, sugar plant in Imishli began operating, the salt plant in Absheron, milk and milk products plant in Agjabadi, canning plants in Gabala and Khachmaz, food industry enterprises equipped with new and modern facilities in Oguz, Agsu, Shaki and other regions had been put into operation.