Azerbaijan is oil rich country located on the crossroads of east and west, Asia and Europe. Its geopolitical importance and natural resources makes country attractive for foreign investors, banks and various investment organizations. This article aims to explain why it’s worth to invest in Azerbaijan and whether project finance is beneficial in this country.Azerbaijan has a good experience in project financing and most of the financed projects implemented with huge success. Since being member of Asian Development Bank Azerbaijan has received 1.6 billion US dollars as a loan that helped to implement projects in various fields such as transportation, energy, water and other urban infrastructure services, and private sector development. European Bank for Reconstruction and Development has invested in 161 projects with over $2.46 billion across various sectors of the economy. Also, World Banks has its office in Baku and the Bank is working with Azerbaijani government to increase its capacity to manage its energy resources.
Another project finance deal in Azerbaijan was construction of polymer plant in Sumqayit, Azerbaijan. Azerbaijani government itself is planning to finance numerous projects such as Azerbaijan-Iran railroad project. Azerbaijan has received an external financing with government guarantee for the second Azerbaijani satellite project as a part of it air-space program. In 2018, the country is expecting an increase in project financing by external investors (banks, financial institutions, investment organizations) to the sectors such as oil and gas, petrochemicals, food industry and etc. Azerbaijan’s experience in project financing and optimistic forecasting regarding the economy makes country attractive for foreign investment.
We believe Azerbaijani legislation is amicable to foreign investors and there are no major limitations or implications under the Azerbaijani laws. The major legislative act regulating project financing is the Civil Code. Also the law on Currency Regulation and regulations of the Central Bank of Azerbaijan apply to project financing. Azerbaijani parliament recently adopted a new law on build-operate-transfer (BOT) projects which make project financing even more attractive for foreign investors. Investors receive “investment promotion certificates” as a benefit which grants them several tax and custom privileges. The Law on Protection of Foreign Investment and Law on Investment Activity provide clarity and guidance in this respect. These laws aim to protect the rights of investors in accordance with best international practice. Further the government regularly conducts legislative reforms to improve foreign investors’ protection and attract investors to the country.
This article was published by Baku Attorneys & Consultants, an Azerbaijani law firm. We have been advising on multiple project finance transactions to foreign and local business in Azerbaijan. Please, do not hesitate to contact us via www.batco.az in case you have further questions or need advice on project financing related matters, as well as, corporate, business, migration, employment, contracts and other legal issues.