An Expert Says AIC Might Attract Foreign Investments to develop Chemical Production in Azerbaijan

An Expert Says AIC Might Attract Foreign Investments to develop Chemical Production in   Azerbaijan

Azerbaijan, Baku/ Trend / Ellada Khankishiyeva, Trend 's expert at the Analytical Centre, considers that the Azerbaijan Government reducing the excise rate on electricity and gas for the state company Azerkimya will lead to a growth in GDP due to the resumption of production of chemical enterprises working in the country and certainly on the employment of the local population.

From now and on, one liter of naphta delivered to Azerikimya for different chemical production will be subjected to an 8% tax, not a 19% one. The wholesale of one ton of oil delivered to Azerkimya by SOCAR will be AZN 210 (VAT and delivery included).

Notably, Azerbaijan's chemical enterprises receive naphta from the Baku-based oil refinery plant, Azerneftyag, which is a part of SOCAR (State Oil Company of Azerbaijan). Every year, Azerkimya's subjected enterprises need some 300,000 tons of naphta.

The state company Azerkimya has resumed production and the plant, EP-300 has resumed its operations. Other chemical enterprises subjected to the state company are expected to restart output of their production this week. It was the decision on reducing prices on electricity, gas and naphta for the country's largest industrial facilities, which was recently made by the Azerbaijani Government that triggered the resumption of the output of production at the enterprises subjected to Azerkimya.

Notably, the plant EP-300, Orgsintez, and the Surfactant Species Plant are the largest enterprises of Azerkimya. Over 10,000 people work on the enterprises of Azerbaijan's chemical industry.

"The Government maintaining Azerkimya's subjected companies is a necessary step. Azerkimya is a state-run company, and the state is the only guarantee that can help it," said Mrs. Khankishiyeva.

The Azerbaijani Government has elaborated the State Programme on Development the Industry for 2007-2012, which includes reforms to be made in the institutional structure and preparation for lax terms (taxes, duties, etc.) to develop the industry.

"The Azerbaijani chemical industry plays a role in the programme, particularly if you take into consideration that fact that Azerbaijan took the leading position in this field in the USSR during the Soviet period," she added.

Notably, in 1990, Azerbaijan's chemical industry produced 58 different types of chemical. Today, the country produces only 7-8. In 2006, 1.6 % of the total volume of the output of the country fell to this field of industry.

Chemical production provides some fields of industry with raw materials, including the defence industry, construction sector, agriculture and pharmaceutical production.

"However, the role of the Government in the chemical industry of the country should not be restricted to it only. For example, the Azerbaijani Investment Company (AIC) may be engaged in issues connected to the attraction of foreign and domestic investments for the development, technical re-equipment and modernization of chemical production in the country, as well as to improve the qualification and professional skills of the technical and managing staff," considers the Trend expert.

According to her, it is necessary to conduct market research and studies of external markets of chemical production to ensure the expansion of export potential on the basis of it, as well as to increase the production of chemical production, which are capable to compete in international markets and to export it.

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