Weekly actual topics in Azerbaijan (Dec.22-26)
ADB offers to open access to energy distribution for private companies in Azerbaijan
In the near future, the distribution of electricity in Azerbaijan may be handled by private companies, the head of the Baku office of the Asian Development Bank (ADB) Olly Norojono told reporters.
He said that the ADB explores the appropriate opportunities in the country.
"We know that now energy, particularly electricity, is under the full control of the state," said Norojono at a press conference on the results of ADB operations in the country in 2014. "Recently, our bank has started providing technical assistance in this issue - we analyze the ways and means of admission of the private sector to this sphere."
He said that the study will affect not only the distribution, but also the production of electricity.
"The work has just begun and it is too early to talk about some details," said Norojono. "We will also consult with the government on this issue. After the analysis, namely, by the middle or the end of 2015, it will be possible to say whether the government will accept our offers or not."
The Asian Development Bank plans to allocate $140 million on the development of energy sector in Azerbaijan over 3 years, stated the bank's new strategy of cooperation with Azerbaijan for 2014 - 2018, approved by the ADB Board Sept.30.
"These loans are provided for 2015-2017 and aimed at the support of the development of renewable energy sources in Azerbaijan, which contributes to the diversification of energy sources and the use of wind, solar, hydro energy, biomass and others," said the strategy.
ADB plans to implement a pilot project on renewable energy in order to assess the capacity of public and private investment in this area.
ADB is also ready to consider the possibility of financing the investment program to improve the efficiency of the transmission and distribution of electricity.
"ADB will continue its dialogue with the government on the issue of tariffs and facilitate reforms in the energy sector of the country. Bank is assisting the government of Azerbaijan in order to develop a master plan for the energy sector, determine investment priorities, assess the tariff system and optimize financial resources," the document says.
The electricity consumption will rise to 99.9 percent of the population by 2020 (compared to 85 percent in 2011) and will amount to 2500 kilowatt / hours (compared to 1650 kilowatt / hours in 2011). The total revenue from the sale of electricity will increase to $900 million by 2018 (compared to $862 million in 2011), while CO2 emissions will be reduced to the level of 24,000 metric tons per year by 2020, according to the bank's forecasts.
Currently, the production and distribution of electricity in the country is carried out by the Azerenergy state monopolist.
No ban on early repayment of loans in Azerbaijan - Central Bank
Central Bank of Azerbaijan (CBA) has not observed cases of failure of acceptance of early repayment on the mortgage or consumer loans by banks, the CBA said.
"Such cases are contrary to the Civil Code of Azerbaijan," the bank said. "Thus, in accordance with the Article 744 of the Civil Code, the borrower may partially or fully repay the debt on the loan in compliance with one month notice. On the other hand, the CBA has not observed such cases."
Each borrower in case of failure of acceptance of early repayment by bank can go to court, according to the source. "Protection of the rights of consumers of banking services is one of the permanent priorities of the Central Bank," said the Central Bank. "With this purpose, the CBA has a department for the protection of the rights of consumers of banking services. Citizens may apply to this department on other issues as well. In addition, starting from 2014, on the recommendation of the CBA, departments for consumer complaints were created in each bank, where they can apply on any issue. I should add that in addition to the above mentioned, each consumer can apply to the court."
The bank has the right to include an option on prohibition or the use of certain penalties in case of early repayment of the loan to the loan agreement, but at the same time, the client himself also has the right to include an option of permission of early repayment into the contract, the member of the Parliamentary Committee on Economic Policy, MP Vahid Ahmadov told Trend earlier.
"Everything depends on the conditions of the contract and the bank has the right to take such step to keep its interest income," he said.
A number of countries, such as Turkey, Kazakhstan and Belarus have a legislative prohibition or restrictions on early repayment of the loan, although there is no such a ban in Azerbaijan, banks take measures for demotivation from early repayment.
Chairman of the Board of Rabitabank Elchin Gadimov also believes that the bank cannot prohibit the client to repay the loan ahead of schedule, but it may apply certain penalties.
He said that the problem lies in the fact that when the client returns the money ahead of time, it interferes with the scheduling of fund placement of the bank, and the bank cannot effectively accommodate the money.
"That is, for example, the bank expects that the money given to a customer as a loan, will be returned after a year, and these funds will be used for the return of deposits, payment period of which has already come," he said. "When the customer repays the loan early, unused funds remain in the bank, which creates a certain loss of underearned means. Therefore, it is important that the funds deposited for a year, would be returned during the year as well."
Gadimov said that in connection with this, the bank has to apply certain penalties that vary within 1 to 2 percent of the remaining loan amount, the previously repaid loan amount, etc..
"This option must be specified in the loan agreement, otherwise the bank has no right to apply penalties," he said.
Similar measures are also used in Turkey, where penalty in the amount from 10 to 60 TL is used, which causes dissatisfaction of customers with the banks. But, for example, in Russia, the borrower's right to early repayment of the loan is fixed at the legislative level, and the borrower must notify the bank about the repayment of the loan within 30 days.
Head of Rabitabank said that repayment of the loan ahead of schedule is rather frequent. "Credit culture in Azerbaijan is young," said Gadimov. "People experience some discomfort due to the credit load, and when they receive unplanned funds, premium, bonuses, travel money and so on, they are trying to fully repay the loan in spite of the fines."