AUTONOMOUS REFORMS

Last year, Nakhchivan Autonomous Republic (NAR) launched large-scale administrative and personnel transformations to improve the business climate, expand domestic production and exports. This year, the Cabinet of Ministers adopted a detailed action plan as part of the State Programme of Socio-Economic Development of NAR for 2023-2027. In particular, it is planned to create a free economic zone (FEZ) in the autonomy and to launch new projects in various sectors of the national economy: transport, energy, agriculture, industry, mining and tourism.

Two-phased programme

The ultimate goal of administrative reforms in NAR is to implement targeted economic reforms and accelerate the sustainable development of the autonomy. There are also plans to seriously upgrade the energy and transport infrastructure, create new agro-industrial, processing and mining companies, and implement other strategic projects through attracting local and international investors to the region. The idea is to bring the baseline parameters of Nakhchivan up to the general indicators of Azerbaijan's socio-economic development and to more actively use the labour resources of the autonomy with a population of about 460,000 people.

The State Programme for Socio-Economic Development of Nakhchivan Autonomous Republic for 2023-2027 approved by President Ilham Aliyev in early June 2023 became a key stage of reforms. It is planned to implement the programme in two stages: 2023-2024 and 2025-2027. The document includes 11 basic directions covering a set of measures to develop rural areas, create a favourable business environment, as well as to ensure the development of export-oriented value chain by attracting investments and creating new permanent jobs. The most important priorities include accelerating the development of trade and intermediary services, development of the export-oriented industry and agro-processing sector. The list of key areas includes promoting tourism and balneology, increasing electricity production and exports, upgrading transport infrastructure, developing the social sector and human capital, institutional development and strengthening environmental protection.

Energy agenda

One of the most promising vectors of development in NAR is the construction of a powerful power generation and transit infrastructure, creation of a SCADA centre, modernisation of the distribution network and other facilities designed both to meet the growing needs of the autonomy and to export electricity. In particular, it is planned to improve the transmission power system of the republic, to build a 330/110kV Shakhtakhty substation and lay a 255-kilometre transmission line. It is also planned to build another substation on the border with Türkiye to convert 330kV into 400kV, from where a 230-kilometre double-circuit 400kV transmission line will be laid to Türkiye.

The upgrade of the transmission system in Nakhchivan will make it possible to receive significant volumes of electricity from the mainland, including green electricity from Garabagh and Eastern Zangezur, produced by small hydro, solar and wind power plants, and transfer it along the Zangezur corridor through Nakhchivan to Türkiye and European countries. A significant volume of electricity will be produced in Nakhchivan itself for export, thanks to the operating five small and medium-sized HPPs and two solar power plants in the districts of Babek and Julfa.

The above-mentioned action plan particularly focuses on the further development of Nakhchivan's hydro potential. Thus, in 2024, the construction of Ordubad (36MW) and Tivi (15.6MW) HPPs will continue. In 2023-2024, it is planned to ensure the overhaul of the Bilav HPP water channel, the reconstruction of the oldest Araz HPP and the overhaul of Nakhchivan modular power plant (87MW). 

According to Azerbaijan's Ministry of Energy, new RES facilities will be established in the autonomy in the near future, including the 400MW solar power plant planned with Nobel Energy Management and a wind and solar power plant (500MW) with France's TotalEnergies.

In the coming years, it is also planned to build wind and solar power plants with a total capacity of 1,500MW through the involvement of foreign investors. About two thirds of the produced electricity will be exported.

Another significant project within the state programme will be the construction of the 97.5-kilometre Igdir-Nakhchivan gas pipeline. The groundbreaking ceremony of the facility was held on September 25, 2023 with the participation of the leaders of Türkiye and Azerbaijan. "The construction of the Igdir-Nakhchivan gas pipeline is an important event in the history of our brotherly relations and will further boost our relations and improve the energy security of Nakhchivan to a greater extent," President of Azerbaijan Ilham Aliyev said. The new pipeline is designed to pump 730mcm of gas annually. This will be enough to fully cover the popular and industrial demand for natural gas in Nakhchivan.

Free zone

Another large-scale block of reforms includes the creation of an agro-industrial cluster in Nakhchivan based on innovative technologies, as well as the use of public-private partnership. Future investors will receive tax and social insurance benefits. In addition, it is planned to create a special customs zone and logistics centres to form a regional trade hub and to support exports to foreign markets. It is also planned to develop the Invest in Nakhchivan website for investors and exporters and to hold an international-level forum in the near future.

In the future, a free economic zone (FEZ), an industrial park, and the Sharur industrial quarter will be created in Nakhchivan. Preparations for this project are underway. According to the action plan, the creation of agrarian processing enterprises will be encouraged in Nakhchivan, including the development of meat and dairy plants, canning factories, workshops for processing fruit and vegetable, production facilities for honey, sugar and starch, processing of leather and wool, as well as container and packaging facilities. Increasing the volumes of processed and packaged agricultural products in parallel with the development of powerful farming parks is a key vector of the State Programme. By the end of 2023, it is planned to complete the assessment of the potential for the development of livestock breeding in the autonomy.

Mining industry and enterprises producing construction materials are among the promising areas. There are 21 ore deposits explored in Nakhchivan that can produce molybdenum, polymetals, arsenic, gold, high quality rock salt, as well as the sources of hydrocarbon-rich mineral waters. This year, AzerGold CJSC will start exploration works on the area of 2,566 sq. kilometres, including the studies on hyperspectral sounding by remote satellite method. The company is also involved in the exploration and research works at Ortakend (gold), Bashkend (copper-gold), Paradash (copper) and Heydagh (copper-molybdenum) deposits located in the district of Julfa, Nakhchivan.

The five-year state programme also includes the development of transport communications, including the reconstruction of the railway infrastructure of the autonomy with access to Kars in Turkey, and the design of a tram line in the administrative centre. In turn, Nakhchivan plans to attract low-budget air transport and passenger companies, organise regular flights and cargo transportation with regional foreign airports, and expand the terminal at the Nakhchivan International Airport.

The growth of railway, road and air communication with Nakhchivan should become an important element in the development of tourism in the region. According to the Cabinet of Ministers, by the end of this year, thematic tourist centres will be designed near Lake Batabat (near the Astrophysical Observatory) and in the city of Ordubad. It is also planned to develop hiking routes based on mountain trails maps, to determine the settlements favourable for tourism, as well as to develop projects on winter, rural and ecotourism. 

Apparently, the Azerbaijani government does not intend to put these projects on hold. For over a year now, Nakhchivan has been carrying out personnel changes and improving the system of state administration, increasing the efficiency of its economic potential, ensuring transparency in the socio-economic sphere, improving the business environment and developing public-private partnership mechanisms.