Rebooting Nakhchivan economy
Review by Caliber.Az

ANALYTICS  09 February 2023 - 14:22

Over the last few years, Azerbaijan has implemented large-scale reforms aimed at improving the business and investment environment, ensuring fiscal transparency, curbing the shadow turnover in production and trade, etc. These reforms were not fully implemented in Nakhchivan Autonomous Republic (NAR) due to a number of subjective reasons. However, last year large-scale administrative-legal and personnel reorganisation started here to improve the business climate and intensify production and export. A delegation of the Ministry of Economy, other state institutions, and business circles have recently visited the Autonomous Republic to assess the possibilities for increasing the economic potential of NAR.

Since the end of the last year the Accounting Chamber, General Prosecutor's Office, and other competent bodies carry out examinations in various state institutions of Nakhchivan AR, and the facts of corruption, theft of state property, and other violations of law were revealed during the investigations. That is why a large-scale personnel reorganisation has been initiated here and structural reforms are being carried out in state agencies. The final aim of all administrative transformations and economic reforms, undertaken in NAR, is to ramp up the development of autonomy and to bring the basic parameters to the general socio-economic indexes of the country. In order to successfully implement these tasks today relevant resources have been mobilized and the human potential of all of Azerbaijan has been involved.

A delegation of government agencies and businessmen led by Economy Minister M.Jabbarov visited Nakhchivan on February 7. They discussed in detail the ongoing reforms and prospects of economic development of the region with the participation of NAR governing bodies. "We are in Nakhchivan, our historical city, together with our colleagues. At a meeting with Fuad Najafli, the Plenipotentiary Representative of the Head of State in NAR, we shared our views on the prospects for accelerating the development of the economic potential of the autonomy, improving the business environment and supporting entrepreneurs," Economy Minister Mikayil Jabbarov noted on his Twitter page.

During the talks, aspects of implementing significant infrastructure projects in the field of electricity, construction of modern roads, educational and health facilities, as well as the possibility of opening new businesses and creating additional jobs were touched upon. It was noted that the efforts to improve the management system and measures aimed at the more efficient use of economic potential, an increase of transparency in the socio-economic sphere, and improvement of the business environment are the priority directions of reforms aimed at ensuring rapid development of the Nakhchivan Autonomous Republic. According to Fuad Najafli, one of the main tasks is to overcome difficulties faced by the private sector and fully support entrepreneurs, for which reforms have been launched to improve public administration, ensure transparency and develop public-private partnerships.

In accordance with the instruction of the Head of State, a socio-economic development program is being prepared today for the NAR, and at the same time implementation of strategic projects is planned, within the framework of which new enterprises will be established and thereby the value chain will be enlarged. All this will give a chance to more actively use the labor resources of the Nakhchivan Autonomous Republic, which currently has 460 thousand of residents.

The formation of the Zangazur corridor infrastructure that will assist in turning Nakhchivan into a transport-logistical junction of international importance is also seen as a vital initiative. It is appropriate to recall in this regard that within the framework of strategic projects of transport unblocking of the autonomy, 160 km of steel highways existing on its territory will be reconstructed, the border railway junction in Julfa will be modernized, another combined point will be built in Ordubad for transshipment of cars and railway trains. It should be noted that about seven years ago Azerbaijan and Türkiye signed a protocol on the construction of the Nakhchivan-Kars railway and started the design and survey works. The acceleration of this project is urgently needed today. The importance of the Turkish transport vector is also confirmed by the fact that quarantine restrictions were lifted in early February and the country's first land border between Azerbaijan and Türkiye was opened in Nakhchivan through the Sadarak customs border crossing point. In general, in recent years cargo transshipment between NAR and other regions of Azerbaijan keeps within 1 million tons per year, and after the commissioning of road and railway infrastructure in the north-west and south directions and further connection of transit cargo transportation between Türkiye, Russia, Central Asian countries, the passage of cargo through the autonomous republic will increase manifold, contributing to the establishment of service, storage, forwarding companies and increase in transit revenues here.

At the same time, Nakhchivan has great potential for the development of electricity and electrical power transit. There are already plans to build high voltage power lines and high capacity substations, which will connect the autonomy to the energy complex being formed in Karabakh and Eastern Zangazur, consisting of small hydropower plants, solar and wind power plants. This system will allow exporting electric energy to Türkiye and other countries of the region. The construction of new HPPs and other facilities for generating renewable energy sources in the autonomy is also promising. In particular, as Azerbaijani President Ilham Aliyev pointed out recently, the construction of a solar plant with a capacity of 500 MW in NAR is planned for the near future. Currently, there are five small and medium-sized HPPs, as well as two solar power plants in Babek and Julfa districts. The construction of other RES facilities is also envisaged and in the near future, this potential will not only fully cover the domestic needs of NAR, but will also allow exporting surplus "green" electricity.

The development of mineral resources of Nakhchivan AR, the formation of the mining industry, the creation of enterprises for the production of building materials etc. are seen as equally promising. In this regard, NAR has rather a strong potential: 21 ore mines have been explored, four of which - Paragachay molybdenum deposit, Gumushlu, and Aglere polymetals, Daridag arsenic deposits - have already been involved in the industrial development, another one - Gapidjig has been left in reserve. Preliminary appraisal work has been conducted on the remaining 16 deposits. Also, among promising deposits of gold and other precious metals, it is worth mentioning the contract area of Piyazbashi and Agyurt, 462 square kilometres in the Ordubad region of NAR. The specialists of Anglo-Asian Mining PLC have been carrying out exploration works here for many years. There are great opportunities for the development of the mining and export of high-quality rock salt, and mineral resources for the production of building materials. The subsoil of Nakhchivan is rich with springs of table mineral water - the most famous "Badamli" and "Sirab", as well as hydrocarbon mineral waters - "Nakhajir" (Ordubad) and "Daridag" (Julfa).

The development of this solid potential, including the expansion of processing and export of rich mineral resources, is the most important objective of the new strategy for the socio-economic development of NAR. Within its framework, it is also planned to implement measures for more effective use of the agrarian and industrial opportunities available in the autonomy. We are talking, in particular, about the support of about 440 industrial and processing enterprises producing over 350 types of products up to a thousand names, the introduction of innovations here, financial support, promotion of promising export markets for agricultural products - high-quality dried fruits, canned fruits, wine products, etc. Another vector of the development of the NAR is the recreational sector: there are conditions for the development of balneological, ecological, and rural tourism, as well as its winter types in the Agbulag ski center.

Expansion of investment cooperation with Türkiye, the attraction of international capital from the EU, the Persian Gulf countries, etc. to promising initiatives in ANR is the key vector of the new strategy. The Ministry of Economy of Azerbaijan also intends to expand the volume of concessional lending through the Entrepreneurship Development Fund (SIF) to assist businesses of NAR.

Caliber.Az