Azerbaijan’s construction sector has been boosted by strong domestic and foreign investment in recent years, and grand new projects are a testament to the country’s growing wealth. As a result of large-scale investments in oil and gas projects, local infrastructure has developed intensely since 1994, and companies have been able to construct to the highest international standards. According to the Azerbaijan Export and Investment Promotion Foundation (AZPROMO), 18% of foreign investment stock in Azerbaijan is in the construction sector, a field of the economy that has grown 3.2 fold in the last eight years.
The increasing arrival of international companies into the Azerbaijani construction sector is further highlighted by its penchant for foreign workers—the sector is indeed the largest employer of foreign labor in Azerbaijan, with 4,190 licenses granted to foreigners to work in the segment in 2011. The rapid growth of local enterprises has also contributed to bringing international standards to the sector, a key factor within the government’s strategy. Indeed, the State Committee on Urban Planning and Architecture brought 17 construction reference codes to European standards, including articles on the construction of administrative and household buildings, bridges and pipelines, hydro-technical installations, public buildings and installations, boiler-houses, waste landfills, medical and preventive treatment facilities, and construction in seismic regions with steel, reinforced concrete, and wood.
Baku is moving into a new phase of its development, and the next Greater Baku Regional Development Plan (GBRDP), which cost $5.72 million to draw up, is set to be commissioned in 2013 with an overall cost running into the billions of dollars. The plan, which is seen as vital for the development of the city since the last general plan was adopted in 1987, includes the 20-year development of Baku, Sumgait, and the Absheron Peninsula, a region that contains over 3 million people. The plan is considered the basis for the expansion of Baku’s future urban growth. One such project is Baku White City, an urban-development scheme to include 10 urban districts with integrated working, recreational, and entertainment facilities that is set to provide 20,000 residential and commercial units, 40,000 parking spaces, as well as jobs for 48,000 residents.
Although still in its early stages of development, the Khazar Islands New City project is even more ambitious in its aims. A residential city located 28 kilometers south of Baku, the project is to be composed of 50 islands and 100 bridges with a total cost of $100 billion. The project also envisages the construction of the world’s tallest building; a 1,050-meter, $2-billion business center, which would make it 220 meters taller than Dubai’s Burj Khalifa. The new city will have its own means of transport, countless kilometers of boulevards and roads, an amusement park, stadium, education facilities, and an airport among many other facilities.
Other projects include the Baku Crystal Hall, the venue for the Eurovision Song Contest 2012, the Heydar Aliyev Cultural Center, and the new Olympic Stadium. The Flame Towers mixed-use project also remained on course for completion in 2012, with a height of 182 meters making it one of the tallest buildings in Baku, behind SOCAR Tower, also in Baku and scheduled for completion in 2013 with a height of 200 meters.
By the end of 2011, 4% of finished industrial products produced in Azerbaijan were building materials, and companies involved in the production of such materials in the Caucasian country produced goods worth $343.79 million.
Due to the high number of ongoing construction projects, cement was one of the materials in highest demand in 2011; Azerbaijan increased cement and clinker imports to 1.83 million tons, up 14.5% over the previous year. Parallel to that trend, cement production in the country hit 1.44 million tons in 2011, 12.4% more than in 2010, thanks to government efforts to transform the country into a major cement producer and exporter.
Garadagh Cement operates the only production plant in the country, and the company has both constructed a new kiln plant that will boost clinker production, and commissioned a new revolving furnace to increase cement production in the near future. Current domestic production covers around 44% of the country’s own demand for cement. However, this figure will increase to 75% by 2013, when NORM LLC puts into operation the largest cement production plant in the Caucasus under the Qizildas Sement brand. Located in the Garadagh district of Baku, it will have an annual capacity of 1.6 million tons of clinker and 2 million tons of cement. According to government plans, this new infrastructure will enable Azerbaijan to cover up to 125% of the country’s demand for cement, which will allow the country to begin exporting by 2014, a view shared by Hasan Yalçınkaya, Country Manager of NORM LLC, who told TBY about his company’s plans to cover local demand, turning Azerbaijan into a “regional hub for cement production.”
Other companies benefiting from the rapid development of the construction sector in the country are Autoclaved Aerated Concrete (AAC), under Synergy Group, which is planning to build a second production plant in the next two to three years with a roofed production area of 12,000 sqm that will also include a plant for the production of quick lime and slaked lime, a silica sand washing plant, a finished product storage area, and a railway line among other facilities, at an approximate cost of $50 million.
Furthermore, Baku Steel Company, traditionally focused on the oil and gas sector, is also expanding its portfolio into the construction market by investing $19 million in the reconstruction of its production plant, and has signed a contract with German company Siemens to replace an existing furnace with an improved 50-ton furnace. The company’s current capacity is 770,000 tons per year and the reconstruction project will increase production to up to 1.1 million tons, bringing the company in line with modern European steel plants.
© The Business Year