Azerbaijan not Interested in Inhibiting Transit Tariffs : Azeri Finance Minister

Azerbaijan not Interested in Inhibiting Transit Tariffs : Azeri Finance Minister

Kazakhstan, Astana / Trend corr K. Arynova / Interview with Azerbaijani Finance Minister, Samir Sharifov, visiting Kazakhstan this week.

Question: Transit tariffs were one of the key issues of discussion during the visit of the Kazakhstan Prime Minister to the Caucasus. As it was stated in Tbilisi, Georgia is losing freight flow due to high transit tariffs in Azerbaijan. Batumi terminal, in particular, is sustaining damage, for freights go via other routes. What is Azerbaijan's position in this respect?

Answer: Azerbaijan is interested in cargo deliveries via its territory on certain transit fees. Previously, it initiated an international conference on restoration of the Great Silk Way and TRACECA transport corridor with its secretariat located in Baku. Therefore, Azerbaijan as the initiator of the event is interested in the development of transit routes. Furthermore, Azerbaijan is also interested in the development of other routes running via the Caucasus, beyond the Black Sea. The Baku- Tbilisi- Ceyhan pipeline (BTC) is a true testimony for it.

With regards to transit fees, it is the matter of each concrete route and the Azerbaijani Government does not always have a direct impact upon the definition of tariffs in these routes. Thus, BTC is operated by a pipeline company led by BP and it has its own profit goals.

On the whole, Azerbaijan has no interest to fix groundlessly the tariffs which will inhibit transit. That is like you saw the bough you are sitting on.

Question: However, it is well known that the reason for high tariffs is that they are fixed by private companies which own terminals, underground routes going to ports, and tanker deliveries.

Answer: Baku as well as Georgia has private companies, but they are experiencing the market impact. In case their tariffs are high, the freight will go via other routes.

Question: Does the Azerbaijani Government influence these private companies?

Answer: The market is the key, which is regulated by supply and demand. If in future the consignors of goods are not satisfied with the tariffs, they will search other routes. At the same time, the price for oil is now very high, and if the prices for goods increase, so why should the tariffs for transportation not increase as well? I have to mention that the tariffs in Azerbaijan have not changed virtually since 1998-99.

Question: Experts say that in the rivalry of routes - via Russia or Caucasus` - everything depends upon what the Caucasus will offer to Kazakhstan which has profitable goods...

Answer: That is quite logical. If any of the aforementioned routes offers less advantageous terms, so Kazakhstan exporters will choose the most advantageous one. But, when speaking of economic profitability lots of factors should be involved. That is not only comparison of prices. One should consider how much the technical opportunities of each of the routes enable reception of increasing volumes of Kazakhstan oil. All possible risks should also be taken into consideration. There is a principle - even if you have a guaranteed route, an alternative should be available anyway. Diversification of routes is a principle of Kazakhstan's export strategy.

Question: What is the purpose of your visit to Almaty and Astana?

Answer: The purpose of my visit is to develop the issues regarding the adjustment of financial mutual settlements between Azerbaijan and Kazakhstan, which were established in 1992-93, on the threshold of the visit of the Azerbaijani President, Ilham Aliyev. The issues have a quite ancient history, they have to be resolved.

What is also of concern is the mutual relationships between the central banks of Azerbaijan and Kazakhstan regarding services on inter-branch settlements and on correspondent accounts opened in the central banks to hold financial mutual settlements between economic facilities of the countries. The Azerbaijani delegation has arrived in Kazakhstan in order to precipitate and adjust them.

Question: Khalik Bank and Turan Alem Bank still has intentions to enter the Azerbaijani market. How do you regard the expansion of Kazakh banks?

Answer: I do not like the word expansion. That means something else. This is not expansion but broadening of cooperation in financial and bank spheres. Before Astana I visited Almaty, the financial centre of Kazakhstan. I held meetings with the bank community, namely the President of Centre Bank, Mr. Saydenov, the administration of Turan Alem Bank and Khalik Bank. The meetings and viewpoints sounded here were very interesting.

I witnessed that Kazakh banks show a great interest for the Azerbaijani market and I am impressed by the position of Grigori Marchenko (the President of National Bank of Kazakhstan - Trend ) believing that any bank entering a new market should really comprehend the situation and should work taking into consideration the interests of other banks. That is a very important factor. The banks that come to Azerbaijan should not be a foreign body, but the competent members of the bank community. It seems to me Kazakhstan banks have this comprehension ability.

Question: Did you find only the banking sector interesting?

Answer: No. We discussed the issue regarding inflation in oil export countries, like Azerbaijan and Kazakhstan, as well as the inflow of foreign investments, including speculative investments and all possible measures taken by the financial authorities of Kazakhstan in this respect.

I am also interested in financing the social sector, particularly the health and social security. I had a very fruitful exchange of opinions with the leadership of the Finance Ministry and Health and Social Security Ministry.

Question: Are you interested in Kazakhstan's experience?

Answer: Of course. I found your experience interesting. Currently we are actively involved in reforming the health system in Azerbaijan and the transition to new principles of financing. This deals with the application of guaranteed medical insurance system by the Government, obligatory and voluntary insurance.

Another issue regards the pension security system. Presently we are developing a very serious program on pension security on the application of new reforms in 2007- 2015.

Kazakhstan has already got private pension funds. Azerbaijani concept also envisages the establishment of private pension funds. At present Azerbaijan does not have any, but we plan to establish this. We are interested in Kazakhstan's experience, as this country has done so much and Azerbaijan is keen to follow the same trend. We do not exclude parallel functioning of the state pension fund.

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