Privatization in Attractive Sectors Announced

Fuel and Energy
Telecommunications
Airlines
Fisheries
Machine-Building Industry

Azerbaijan has recently identified certain enterprises in a wide range of sectors for privatization, including the fuel and energy, telecommunications, airlines, fisheries and machine-building sectors. Both domestic and foreign investors will be permitted to bid on all enterprises.

While the Ministry of Economic Development has yet to specify the methods and timing for privatization of these assets, it is expected that privatization will involve a combination of closed subscription for employees, cash and voucher auctions, investment tenders and case-by-case privatization techniques.

Fuel and Energy

Among the fuel and energy sector enterprises to be offered for privatization are companies currently belonging to Azerbaijan's State Oil Company (SOCAR), as well as to AzeriGaz and AzerEnergy. These include:

• SOCAR's onshore and offshore oil and gas production enterprises;
  
  
• petroleum machine-building enterprises and oil storage companies;
  
  
• AzeriGaz's gas transportation and distribution enterprises; and
  
  
• AzerEnergy's enterprises in the power system.

Telecommunications

The following enterprises will be spun off the Ministry of Communications:

• Baku Telephone Network;
  
  
• AzTeleCom Amalgamation;
  
  
• Baku Telegraph;
  
  
• AzerMetbuatYayimi (Press Distribution) Amalgamation;
  
  
• Gasid (Press Distribution) Firm;
  
  
• Tele-Radio Amalgamation's Orbit Station (in Garadag region);
  
  
• Tele-Radio Amalgamation's International Satellite Station; and
  
  
• the state share in the joint ventures created with the participation of the Ministry of Communications and its subordinate enterprises and organizations.

Baku Telephone Network, AzTeleCom Amalgamation and TeleRadio Amalgamation's International Satellite Station will be subject to case-by-case privatization, while the other listed companies will undergo general privatization procedures.

Airlines

The following enterprises will be spun off from the Azerbaijan Airlines State Concern:

• Azerbaijan Hava Yollari (Azerbaijan Airlines) National Company;
  
  
• Azerbaijan Hava Yollari (Azerbaijan Airlines) Cargo Company;
  
  
• Baku AzalHelicopter Company;
  
  
• AzalCargo Company (in Yevlakh city);
  
  
• AzalAvlaMontaj Company;
  
  
• International Commerce Office; and
  
  
• the state share in the joint ventures created with the participation of the Azerbaijan Airlines State Concern and its subordinate enterprises.

These enterprises will all be subject to general privatization procedures.

Fisheries

Thirty-six enterprises of the AzerBalig State Fishery Concern have been identified for privatization. Some of the planned privatizations will involve companies reported to be involved in the sturgeon and caviar business. General privatization rules will apply.

Machine-Building Industry

The following machine-building enterprises are among those opened for privatization through investment tenders:

• AzerElectroMash (Electric Machines) Scientific Production Union;
  
  
• AzerElectroTerm Scientific Production Union;
  
  
• Baku Kondisioneri (Air Conditioner) Scientific Production Union; and
  
  
• Chinar Production Union.

For further information on this topic please contact Kenan Najafov at Baker Botts LLP by telephone (+994 12 97 63 88) or by fax (+994 12 97 63 91) or by e-mail ([email protected]).
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