BUSINESS

$2.8 BN NEEDED FOR WATER-SUPPLY SYSTEM RECONSTRUCTION

$2.8 billion is still needed for a complete reconstruction of the water-supply system in Baku, Sumgayit and Absheron peninsula, according to the Absheron Regional Water Company (ARWC).

It is remembered that a credit of $94.9 million was allocated under the Big Baku Water Supply System Rehabilitation Project: $61 million was allocated by the WB, $23 million by the EBRD and $10.9 million by the Azerbaijan Government. 6 projects have already been implemented: reconstruction of 27 pumping-stations completed, 190 km of water pipes replaced, 91 expense meters purchased, enabling accurate counting of water expenditure at purification facilities, trunk water pipelines, city pumping stations. Reconstruction of purification facilities on the Kura and Jeyranbatan is currently underway.

A lot still remains to be done, including the introduction of a new water purification technology. The contract is valued at $26,320,000. The work is expected to complete in December 2001.

Baku received potable water from 4 sources: Shollar, Khachmaz and Kura water pipelines, and the Jeyranbatan water-reservoir. The first two sources provide water from subterranean waters extracted by artesian and sub-artesian wells.

Reconstruction on agenda

The state committee on melioration and water economy is currently studying the proposals within the tender announced in early October for reconstruction of the main water-collector on the Samur-River. The tender is being conducted as part of the rehabilitation of Azerbaijan's irrigation and drainage infrastructure project financed by the WB International Development Association.

According to the tender commission, proposals of 8 companies are under consideration: 5 local, 2 Turkish and 1 German. These have been selected from a total of 17 companies, including Russian, Slovakian, Chinese, Iranian.

A winner of the tender will be announced after the tender commission completes work in 1.5 months.

BAKU TO BECOME REGIONAL OIL AND GAS TRANSPORTATION CENTER

"Impressive progress" has been made on the Baku-Tbilisi-Ceyhan (BTC) pipeline project in the past year," Counselor to the U.S. Department of Commerce Jan H. Kalicki said November 28 in London.

Kalicki, who also serves as U.S. ombudsman for energy and commercial cooperation with the New Independent States, was speaking at the third annual Caspian Energy Retreat.

While the U.S. role has so far been "to encourage the various parties in their negotiations," Kalicki said, at this "critical phase" U.S. financing and credit agencies such as the U.S. Overseas Private Investment Corporation (OPIC) and the U.S. Export Import Bank "stand willing to discuss their possible role in supporting the U.S. investors in the BTC pipeline" - including financing, political risk insurance, and export credits.

In making the case for the BTC pipeline and the trans-Caspian gas pipeline (TPC), Kalicki pointed to the large volumes of oil expected from the giant Kashagan field, the environmental hazards associated with increasing tanker traffic in the Bosporus, and the "questionable economics" of alternative routes.

OECD CLEANER PRODUCTION PROGRAM DISCUSSED

Potential activity of governments, donors and OECD’s (Organization for Economic Cooperation and Development ) program "Cleaner production" were in the focus of consultations in Baku November 27-29 attended by 10 CIS countries, as well as Germany, Norway, Czech Republic, Hungary, Lithuania, and Latvia.

On November 29, participants traveled to the Jeyranbatan water-reservoir, where the Absheron Regional Water Company is implementing a water-purification project.

The "Cleaner Production" program primarily envisions nature conservation measures without huge financial investment, inexpensive repair of equipment and pipeline malfunctions leading to oil leaks and soil pollution, etc.

The first stage of the program started in Azerbaijan in March 1999 on the initiative and sponsorship of the Norwegian government, thus economizing $550,000 a year. The second stage is scheduled to commence in 2001, coordinator of the program in Azerbaijan Imran Abdulov told Azernews Saturday.

NEW MODEL OF SMALL-SIZED ROAD-ROLLER DEVELOPED

The construction bureau of the Mingachevir production unit "AzerRoadMachinery" has completed the design of an experimental small-sized double-axis road-roller weighing some 8 tons to asphalt ground in big and small cities, according to the director of the unit Arif Taghiyev.

In the Soviet times, "AzerRoadMachinery" was a monopolist in production of 16-ton three-axis rollers used in construction of high-ways and airport runways. After the break-up of the Union, the demand for the products has declined, while production has been brought to a standstill.

It is hard to predict whether the new rollers will be put on large-scale production or will repeat the fate of a unique in Europe "Mach-100" road-rollers, which was also designed and built by the Mingachevir plant. One of the two rollers was then purchased by Moscow, while the second is standing idly in the enterprise's premises, A. Taghiyev said.

SERVICE MARKET REGULATION GETTING TOUGH

At the present time, almost a third (33.2%) of the payable services market operates without official registration. It is, therefore, impossible to exercise any regulation of the sector in terms of safeguarding consumer rights. At the same time, the increase in the volume of services provided by unofficial sector (by 10%), as compared to 1999, exceeds that of the official sector three times (3.7%). The growth in the total volume of payable services provided to the population constituted 5.7%.

SAFEGUARDING ECOLOGICAL RIGHTS

The Ecolex-Azerbaijan NGO, the Union of Ecologists of Bashkortostan (Russia) and the Institute of Ecological and Legal Problems "EcoJuris" (Moscow) have tackled implementation of the "Enforcing the rule of law in public ecological control over trans-national oil companies in the Caspian region" project, financed by Caspian program ISAR, according to the director of Ecolex-Azerbaijan Samir Isayev.

He said there are no public organizations in Caspian littoral countries, which would safeguard the human right for a favorable environment envisioned by international and national legislation.

There is a great demand for those specializing in oil production ecology and capable of carrying out qualified ecological control over this economic sector.

Azerbaijan is the main oil producer in the Caspian region. In fact, it is here that the problem of oil production ecology is particularly acute given Azerbaijan's most adverse environmental impact. Therefore, it is extremely important to invigorate public ecological control on part of Azeri NGOs in cooperation with Russian ones, Mr. Isayev said.

WB MISSION VISIT POSTPONED

A World Bank mission was expected to visit Azerbaijan December 4-8 to discuss with the Azerbaijan government the opportunities for present and future assistance in the socio-economic development of the republic. However, due to the November 25 earthquake in Baku, the visit has been postponed till January 2001, according to a letter from the WB regional director Judy O'Connor to President Aliyev.

The letter also voiced the readiness of the Bank to provide assistance necessary to eliminate consequences of the calamity.

6 APPLY FOR CONCESSION OF "BAKU ELECTRICITY NETWORK"

5 legal entities and a consortium have been granted the status of contenders in the competition for concession of the "Baku Electricity Network" Joint Stock Company.

According to the Ministry of State Property, among these are: "AzerElectric", which is fully financed from abroad, Dutch AES Parkshot Holding B.V., a consortium of Czech companies ETZ Praha a.s., STE a.s. and Omnirol a.s., German Stadtwerke Leipzig GmhH and Siemens A6, and Turkish Barmek Holding a.s.

The tender commission has started evaluating tender bids and a winner will be announced in 2 months.

ADB INVOLVED IN POVERTY-ERADICATION PROGRAM

Poverty-eradication is the key strategy of the Asia Development Bank (ADB) assistance program in Azerbaijan, the head of the IDB group for Azerbaijan Marco Gatti told the vice-premier of the Azerbaijan Government, chairman of the state commission on refugees Ali Hasanov Friday.

He said it would be better to assist the Social Development Foundation of the IDPs, which, unlike other foundations, has the opportunity of cooperating both with the state and private organizations.

Mr. Hasanov said the Azerbaijan government appreciated the IDB assistance at a time, when other donors and international humanitarian organizations have significantly curtailed its volume.

FERROUS METALLURGY DEVELOPMENT PROGRAM PREPARED

The Ministry of Economics has prepared a ferrous metallurgy development program, which dwells upon the development opportunities of the sector and investment prospects both for the government and foreign companies. The program has been forwarded to the Cabinet of Ministers.

SIMPLIFIED TAXATION SYSTEM TO BE APPLIED SINCE 2001

A new Tax Code, adopted in July, 2000 is expected to become effective since January 1, 2001. Its key merit is a considerably simplified taxation, tax calculation, collection and transfer to the state budget, as well as a substantial decrease in tax items and rates thanks to the expanded tax framework. For instance, the income tax rate has been set at 27% (in the last two years it has decreased from 32 to 27%), while Value Added Tax rate has declined from 20 to 18%.

Taxes levied on the dividends of foreign businessmen have dwindled from 15 to 10%. The Code indicates only the upper limit of taxes, which may reduce as economic situation in the country improves.

INVESTMENT PROJECTS OFFERED TO GERMAN PARTY

The Ministry of Economics has forwarded 13 various investment projects to German investors, while 20 more have been submitted by the ministry of state property, deputy minister for economics Oqtai Aqverdiyev told Azernews Monday.

Aqverdiyev-led delegation attended an international economic symposium last week and a meeting of the Azeri-German working group "Trade and Investments". According to Mr. Aqverdiyev, the parties exchanged views on investment opportunities in the Azerbaijan economy.