Trend's Interview with Executive Director of Azerbaijan Investment Company, Anar Akhundov
AIC was founded by the order of the Azerbaijan President issued on March 30, 2006 with the aim to encourage investments to the non-oil sector, renew the material and technological base in the existing enterprises in this sphere. The statuary capital of the company in the amount of 90mln manats has been paid by the State oil Fund of Azerbaijan.
Question: What were Azerbaijan's obligations during the establishment of the Azerbaijan Investment Company and how much were they implemented at?
Answer: Lots of work has been done within the framework of major state program on development of non-oil sector of Azerbaijani economy and part of this work resulted in the establishment of an investment company, which pursues two objectives.
The key objective is to support the non-oil sector and companies involved in this sector, and the assistance in implementing the projects. AIC could participate in the implementation of these goals in two ways:
First - investments in the stock and shares of companies functioning in this sector or new companies, which are established to implement different projects in this sphere. Second not only private participation in these projects, but also attraction of investors to co-investing or co-financing, i.e. attraction of other investors to perspective projects.
Question: What about the spheres where the evaluation was carried out for further participation of AIC?
Answer: We carry out estimation of projects in agriculture, production, re-production of agriculture products, production of construction materials with the consideration of high demand for them in Azerbaijan and there is a chance to organize import-substituting production of definite construction materials, including cement.
Large scale estimation work is carried out in the petro-chemical sector with the participation of consultants. It is a very interesting and perspective market and we are waiting for logistics projects in the transport sphere and began working in this field. We are also waiting for partners and simultaneously study the markets with investing in the pharmaceutical sector, manufacturing of medical devices, because there are opportunities for import-substitution and production.
Question: Could you name the projects in the sectors where the estimation work is underway?
Answer: We have an agreement with companies to preserve confidentiality during the preliminary analysis, while they would be announced after the conclusion of memorandums of intention. I hope, we will be able to announce several of them by the end of the year. Several projects are near the end and we are keen to finalize their initial analysis this year and coordinate with the management of these companies. Meanwhile, I should note that a lot of work has been done for the establishment of petro-chemical complex. There is clarity in investing in the production at Garadagh Cement for application of more advanced technologies. We do not only increase the capital of any company, but we also should know the destination of investments. AIC has announced on its plans of investing into the construction of a new dairy factory. For us it is very important to see the major shareholder to have relevant experience. It is dealt with Milk PRO, where the European Bank for Reconstruction and Development (EBRD) acts as a shareholder. EBRD is expected to put major capital with us.
Question: Could you inform about results of estimation of project on establishment of petrochemical complex in Azerbaijan and the necessity for its existence at chemical enterprises in Sumgayit?
Answer: The consultants are studying all opportunities and it actually delays the work. The new complex will include assortment and logistics, access to crude and ready products. There is preliminary analysis, that consultants produced based on the state of market.
Question: Have you defined on which basic raw material the products will be manufactured in the newly established petro-chemical complex naphta or gas, if to take into consideration the domestic deficit for both products in the country?
Answer: Based on the professional experience in this sector, over the past period the organization of production with the use of gas seems more perspective. Still the consultants should define this. At present the potential of Shah Deniz gas should be determined and it is very important in the process of estimation. Currently, the consultants are actively cooperating with the oil composures in the direction of estimation of fields.
Question: When do you expect the completion of the analysis of the project on establishment of petro-chemical СЃcomplex and what is preliminary budget of the project?
Answer: In January 2007 it is planned to conclude the second phase of estimation, which envisages detailing the project, and definition of preliminary circle of investors. At every stage we should come to a conclusion that it is very perspective. So the work with consultants can be continued.
We are unwilling to repeat the South America experience, where poor quality analysis was carried out, big complex was established, which works in half capacity.
In third stage it is planned to carryout work over business-plan, which will approximately begin no earlier than February-March 2007. Indeed, AIC hurries its consultants, but is eager to maintain the quality. The Company hopes to see the analysis ready by the end of the first quarter of 2007, but still difficult to say when the project will be sanctioned.
The cost of the project will depend on fuel gas or naphta, the capacities and use of the existing. Budget of the project will differ depending on that. The complex is expected to exist in the territory of already existing chemical plants in Sumgayit, as it will be more economical. Moreover, the enterprises which are inactive will be used.
Question: Could you inform about AIC plans for the nearest future? When the company could enter the capital market with its bonds?
Answer: At the end of 1-year activities in 2007 AIC will attract international auditors for the development of a financial report. Later we will set up consultations with international rating agencies. Taking into consideration that AIC is a state company, it seems possible to speak about issue of rating in 2008.
At the same time, AIC will hold talk with big investment banks, who could become the underwriters of the company securities. It is a classical mechanism, but there is no obstacle to attract capital through private placements among groups of investment banks, if necessary.
Issue of eurobonds is the listing mechanism and is possible without ratings. AIC shares can be placed among limited number of investment banks, which can purchase big packages.
This way AIC helps the companies themselves to enter the foreign markets and attract investments. Next year we will have several projects with international institutes, where we will implement corporate governance in the desired pilot companies and will make it ready for the investments. International experts and specialists will be attracted in this respect.