PROBLEM NUMBER ONE

The historic victory of Azerbaijan after almost 30 years will become a determining factor in the country's socio-economic development for the next decade. This message was dominant during the recent government meeting on the results of 2020. During the meeting, President Ilham Aliyev outlined the tasks for 2021. Priority number one is the gradual restoration of infrastructure, the most necessary utilities and other facilities in the liberated territories before the complete revival of Garabagh.

The work has started

A little more than two months have passed since the victory of the Azerbaijani army and the conclusion of a truce that returned the state borders of Azerbaijan to the historical limits recognized by the world community. During this relatively short period, large-scale works on demining, road construction, construction of electric power infrastructure, installation of cellular communication systems began on the lands liberated from the occupation.

"In accordance with the instructions of the president, we have developed in a shortest possible time a concept for the restoration and development of the lands liberated from the Armenian occupation. During the discussions in the Economic Council, the relevant amendments have been made to the document," Minister of Economy Mikail Jabbarov said at the government meeting. According to the minister, in order to ensure an integrated approach to the restoration and development of Garabagh, the authorities plan to materialise the envisaged measures in four stages.

“At the first stage, it is necessary to solve the priority tasks - the issues of management, security and infrastructure to ensure the functioning of social structures. Then the necessary steps will be taken to develop the economy,” Mr. Jabbarov said.

Undoubtedly, the efforts of the state to restore infrastructure and develop the region, as well as the available economic potential and natural resources of the region will become a basis for attracting local and foreign investment in the non-oil sector.

The concept of the revival of Garabagh is based on the principle of economic zoning, which in turn is based on the mineral resources available in each district of Garabagh, features of land and natural landscape, and the established traditional spheres of the economy. Transport hubs in each of the districts are seen as the most important means to boost the development, given their proximity to the restored transport corridors, roads and railways under construction, airports, etc. This factor will also have a significant impact on the future profile and specialization of the economy of each of the districts.

The restoration fund

The concept provides for the widespread use of public-private partnership mechanisms in the implementation of both the investment and infrastructure projects. Thus, it is expected that both local and international private companies are actively attracted to projects implemented jointly with the state for the rehabilitation of road transport and municipal infrastructure, the production of traditional and alternative energy, irrigation and reclamation systems, etc. This mechanism will not only save public funds, but also provide more efficient project management and reduce investment costs.

To encourage private investors in the liberated territories, it is planned to introduce a special preferential economic regime. In particular, the rich experience of Azerbaijan in the development of technoparks and industrial quarters can be used in this case. To attract investors, residents are provided with broad fiscal preferences, exempt from customs duties and VAT for the import of technological equipment purchased for production purposes. Preferential loans and benefits are provided for utilities, rental of premises, etc. Investors willing to invest in the development of the region will be provided with these and possibly broader benefits as well.

It is also planned to attract funds from private and international donors (IFIs), commercial banks and investors, including the Azerbaijani diaspora, etc.

In order to optimize the control mechanisms over the attraction and use of these funds, to coordinate works with investors, including their involvement in the construction and restoration works in the liberated districts, on January 4, 2021, President Ilham Aliyev signed a decree on the establishment of a public legal entity Garabagh Revival Fund and approved the Supervisory Board of the fund. According to the chief analyst of the Center for Analysis of Economic Reforms and Communications Gunay Guliyeva, the objective of the fund is to attract donations from individuals and legal entities, international grants, use the “diaspora-investment” model, and, most importantly, ensure centralized and transparent management of the whole restoration process. One of the sources of funding may be the Garabagh bonds to be issued under the state guarantee.

The fund will need some time to accumulate the reserves. At the first stage, the funding of the majority of initiatives will be ensured by ₼2.2 billion as part of the state budget for 2021.

Roads rule!

As part of the plans for 2021, the main focus will be on the issues of security, infrastructure construction, as well as the development of the agricultural potential of the region. President Aliyev noted that the demining of the liberated territories takes priority. This work must be completed in an extremely short time. Given the scale of demining operations (especially in Aghdam and Fuzuli), as well as the lack of maps of minefields, the number of sappers will have to be increased and their technical equipment expanded.

Demining of the territories is the most relevant issue today, especially in areas planned for the large-scale works for the construction of highways, power lines, and priority infrastructure facilities. The number of such construction sites in the region is increasing every day.

The most active construction works are the construction of the Ahmedbeyli-Alkhanly-Fuzuli-Shusha highway. Another road is designed from Horadiz to Zangilan to Gubadli, and then to Lachin. Ilham Aliyev noted that the implementation of projects for the construction of roads from Toghanaly to Kalbajar has also begun. “Some sections of the Toghanaly-Kalbajar highway are 3,500 meters above mean sea level. So, it is very difficult to use this road in winter months. To overcome these obstacles, we plan to build tunnels. I gave relevant instructions already. The development of the project has begun. The implementation of all these projects will make it possible to create a road transport infrastructure to Lachin and Kalbajar in both directions - both from the north and south,” Mr. Aliyev said.

Railway projects in the liberated lands will be implemented in stages: preparatory works are underway for the construction of the Yevlakh-Aghdam railway further to Khankendi; the construction of the Horadiz-Fuzuli and the Fuzuli-Shusha lines will be implemented in the near future. At the same time, the Horadiz-Aghbend railway line will be reconstructed, which, after the opening of the corridor through the territory of Armenia, will connect with the railway in the Nakhchivan Autonomous Republic.

The most important component of the transport infrastructure of the region will be the construction of an international airport in Fuzuli. Construction works will start in the first half of 2021. Another airport is planned to be constructed in Lachin or Kalbajar. However, due to the mountainous terrain in the above districts, it is necessary to find a relatively flat area suitable for the construction of an airfield. Appropriate surveys are already underway. “Construction of international airports capable of receiving aircraft of any type is extremely important for the economic development of Garabagh, in particular for the development of local and international tourism. AZAL should seriously work on the issue of organizing international flights to ensure air transportation to some of our neighbouring countries immediately after the opening of the airport in Fuzuli,” Mr. Aliyev said.

Home sweet home

There are also plans to restore the region's electric power infrastructure this year. According to Energy Minister Parviz Shahbazov, Azerishig OJSC has begun restoration of energy facilities in Fuzuli, Jabrayil and Hadrut. The border posts of Jabrayil have been provided with electricity. Since the end of last year, a 75-kilometer double-circuit 110-kilovolt power transmission line has been under construction in Shusha. The company also began the construction of a 110/35/10 kilovolt substation there. “At the next stage, a new 308km long power transmission line and news substations will be constructed to make it possible to create a 110-kilovolt network in Fuzuli, Zangilan, Gubadly, Lachin, Shusha, Aghdam and Kalbajar,” Mr. Shahbazov said. In the near future, it is planned to build, together with Iran, power plants at the Khudaferin and Ghiz Galasy HPPs, as well as diversion HPPs on the rivers in Kalbajar and Lachin. The plan envisages the construction of a 200 MW solar power plant in Garabagh as well.

The issue of gas supply to the liberated territories is also on the agenda. According to P. Shahbazov, according to the program developed jointly with SOCAR, it is planned to build a 416 km gas pipeline to the region.

As for the development of economic projects in the liberated territories, according to experts, agricultural projects can provide the greatest return in the shortest possible time with relatively acceptable capital investments.

“We have already started the development of the agriculture potential of the liberated territories. We do some preliminary works on cultivating these lands, including the provision of agrotechnical measures to care of perennial plantations. Thanks to the satellite images of perennial plantations provided by Azerkosmos OJSC, the agrarian department of our ministry is mapping the actual arable lands in Garabagh,” Minister of Agriculture Inam Kerimov said. He added that more than 1 million hectares of lands have been under grain sowing in Azerbaijan in 2020. On the liberated territories, it is planned to increase the sowing balance by 10% in subsequent years. In particular, over 700 hectares of grain have already been sown in the cleared areas of Aghdam, and this process continues.

Fertile arable lands, abundance of water, mountain pastures and favourable climatic conditions will eventually turn Garabagh into a key food base Azerbaijan.