ON A ROLL
On land, sea, and air, Azerbaijan's transport sector is carrying passengers and cargo in record amounts. With several large-scale projects drawing to a close, regional and domestic connectivity has never been so simple.
The transport and communications sector represented 6.6% of GDP in 2011, making it the third largest contributor to the economy after industry, including oil and gas production and construction. The sector is also a significant employer, with almost 4.5% of the population engaged in work across the country's air, land, and sea transportation facilities. In the first nine months of 2012, total investment across the sector totaled AZN1.7 billion, according to figures released by the Ministry of Transport. In 2011, investment totaled AZN2.5 billion, up from AZN2.44 billion in 2010, and 19.7% of total investment made in the country for the year. In further figures released by the Ministry, 114 million tons of cargo and 1.2 billion passengers were transported between January and September 2012. Of the total cargo figure, 16.7 million tons were transported by rail, 9.3 million tons over water, and 87.9 million tons by road. The private sector plays a strong role in the sector, accounting for 70.5% of the 16.4 million tons of goods transported in January 2013, according to Azstat. In 2012, cargo traffic moving through Azerbaijan along the Transport Corridor Europe-Caucasus-Asia (TRACECA) reached 465.4 million tons, up 5.12% on the previous year. The Permanent Secretariat of TRACECA was inaugurated in Baku in 2001, and since then total permanent investment in the country's transport infrastructure has reached AZN7.4 billion, with 1.6 billion tons of cargo and 11.4 billion passengers transported over the same time frame. Average annual growth in freight traffic over the last decade has been 8.18%, and 5.54% in passenger traffic. Turnover has increased likewise, at 17.36% for cargo transport and 6.9% for passenger transport.
In 2013, the Ministry of Transport received $140 million from the state budget, which will finance “the construction and maintenance of roads, junctions, tunnels, pedestrian subways, and other facilities, as well as… various road transport projects," said Ziya Mammadov, Minister of Transport. The development of large-scale projects, including the expansion of Heydar Aliyev International Airport, the new Baku International Sea Port at Alat, and the Baku-Tbilisi-Kars (BTK) railway are “mainly implemented with loans and financial support from international financial institutions," added Minister Mammadov.
ROADS
Azerbaijan has 19,000 kilometers of highways, with the country's road network representing the principle method of passenger conveyance. In 2011, out of a total 1.5 billion passengers transported via all means, 1.3 billion were transported by road, up from 1.2 billion in 2010. Of this figure, 1.26 billion travelled by bus and 465,000 traveled by taxi. Baku's “London Taxi" scheme is also gaining popularity, with 543 of the iconic cabs already in use in the capital. This is expected to increase to 3,000 in the coming years.
In terms of cargo, out of a total 227 million tons transported in 2011, 109 million tons were transported along the road network. This is up from 99.9 million tons in 2010.
The authorities have also embarked upon an overhaul of the highway network, launching reconstruction efforts that could cost over $38 billion, according to the Ministry of Transport. Reconstruction work is estimated to take up to 15 years. Azerbaijan isn't footing the bill alone, however, with much international interest in the renovation and expansion of the country's highways. The World Bank is currently supporting the $356-million Third Highway Project to the tune of a $242-million investment. The project aims to upgrade 100 kilometers of the Baku-Shamakhi highway, and is set for completion in 2015. Azeryolservis, under the Ministry of Transport and financed by the Asian Development Bank (ADB), also announced a tender in February 2013 for the construction of a section of the Masalli-Astara highway. ADB has allocated $200 million to the project, while a total of $400 million has been allocated overall. In January 2013, 51.1% of all cargo was transported by road, according to Azstat.
RAIL
There are 2,079 kilometers of railway in Azerbaijan, 1,251 kilometers of which are electrified. In 2011, 22.2 million tons of cargo were transported along the tracks. Of this, 17.8 million tons were international cargo, 7.9 million tons were transit, and 4.4 million tons were local. The rail cargo sector shows an upward trend in this respect, with a total of 23.2 million tons carried in 2012—just under 21 million tons were transported in 2009. Out of the overall 114 million tons of cargo carried over the first nine months of 2012, 16.7 million tons were carried by rail. Rail also accounted for 11.6% of all cargo transported over January 2013. Additionally, the rail network has also diversified its hauls in recent years, with 4.7 million tons out of the total 23.2 million tons transported in 2012 non-oil products. In 2003, only 2.7 million tons of the total 20.3 million tons were non-oil products.
In passenger terms, 3.45 million people rode the rails in 2011, including 3.16 million locally and 287,000 internationally.
The largest railway project in the country is the regional BTK line, on which construction continues apace. When finished, it will have the capacity to carry 3 million passengers and 15 million tons of freight annually.
Other rail projects include a switching of the Baku-Boyuk Kasik line to a 27.5 kV/AC and later to a micro-processor signaling system, the creation of an automated signaling system for cargo and passenger transport, and the purchase of new passenger carriages as well as new wagons and one- and two-system locomotives. Azerbaijan Railways JSC also plans to increase the speed of trains to 140 kilometers per hour, while also reducing the cost of train travel, said Chairman Arif Askerov.
Baku Metro, the only underground train system in the country, is also set to continue its expansion well into 2014. Two new stations, Avtovagzal and Memar Ajami-2, are set to be opened in 2014 as part of the city's bold 20-year program. The length of Baku Metro currently stands at 34.6 kilometers and has two lines. This is planned to grow to five, with the length increasing to 119 kilometers including 76 stations, which will be more than double the 23 in operation at end-2011.
SEA
In the first nine months of 2012, 9.3 million tons of cargo were transported by sea, while 6.5% of the total carried in January went over water. This signaled a continuation of the upward trend in maritime transport, with 11.7 million tons being transported via the medium in 2010 and 12.5 million tons in 2011. Of the 2011 figure, 1.6 million tons were accounted for by imports, 1.3 million tons by exports, and 8.4 million tons by transit, a figure suggestive of the country's growing status as a trade hub in the Caspian region. In 2011, 17,000 passengers travelled by sea, a small figure that has seen a steady increase in recent years from 10,000 in 2009.
Baku's regional trade aspirations are best reflected in its ongoing plans to move Baku's port 40 kilometers south to Alat. The new Baku International Sea Port will form a key part of TRACECA, with Phase I set to go operational in 2014. The current port's capacity of 15,000 TEUs per year will be dwarfed when new facilities come online with an anticipated 40,000 TEU-a-year capacity. When Phase II is complete, this will increase again to 150,000 TEUs, with the project coming to an end after Phase III grants the port the capacity for 1 million TEUs a year.
AIR
Azerbaijan's airports have benefitted from increased internationalization in recent years, reflected in the steady growth of air as a transport medium. In 2011, 1.4 million passengers took to the skies, 969,000 of which flew internationally and 425,000 locally. This is up from the total of 1 million in 2010 and 941,000 in 2009. In cargo terms, 51,000 tons were transported by air in 2011, 49,000 tons of which were international and 2,000 tons local. The total is up from 40,000 tons in 2010 and 32,000 tons in 2009.
Major plans are under development at Baku's Heydar Aliyev International Airport, with the upgrade to add a new runway, hangars, and a navigation tower. It will cover an area of 58,000 sqm and have the capacity for 3 million passengers a year. Furthermore, the area is expected to be transformed into a free economic zone in order to boost logistics infrastructure, a scheme that could be rolled out to other airports around the country. Heydar Aliyev International Airport is not the country's only international airport, with runway-lengthening projects to allow direct international connections having already been completed at Ganja, Lankaran, and Zaqatala.
ON A ROLL
TABLE OF CONTENTS
Year In Review
The Road Ahead
With a number of important non-oil sectors identified as priority areas, Azerbaijan is embarking on a variety of new projects in 2013. In 2012, overall GDP grew by 2.2% to reach $57.1 billion, and the current account continues to enjoy a surplus of almost $15 billion.
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Shahmar Movsumov, Executive Director, State Oil Fund of the Republic of Azerbaijan (SOFAZ)
TBY talks to Shahmar Movsumov, Executive Director of the State Oil Fund of the Republic of Azerbaijan (SOFAZ), on the fund's growing and diversifying investment portfolio and its contribution to the evolution of wealth and development in Azerbaijan.
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Rovshan Najaf, Executive Director, Azerbaijan Investment Company (AIC)
TBY talks to Rovshan Najaf, Executive Director of the Azerbaijan Investment Company (AIC), on integration with global markets, the company's strategy to increase the amount of non-oil FDI flowing into the country, and the various economic sectors with high potential.
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Khagani Guluzade, Chairman of the Board of Directors & General Direc, Akkord Industry Construction Investment Corp.
TBY talks to Khagani Guluzade, Chairman of the Board of Directors & General Director of Akkord Industry Construction Investment Corporation, on the company's infrastructure and building materials projects, as well as initiatives being carried out abroad.
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Adigozal Agayev, Chairman of the Executive Board, AtaHolding
TBY talks to Adigozal Agayev, Chairman of the Executive Board at AtaHolding, on its contributions to the “Azerbaijan 2020: Outlook for the Future" development concept and its extensive work in the finance and tourism sectors.
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Rovnag Abdullayev, President, State Oil Company of Azerbaijan Republic
TBY talks to Rovnag Abdullayev, President of the State Oil Company of Azerbaijan Republic (SOCAR), on developments over 2012, the opportunity to provide energy security to Europe, and the investment climate.
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Gordon Birrell, Regional President for Azerbaijan, Georgia, and Turkey, BP
TBY talks to Gordon Birrell, Regional President for Azerbaijan, Georgia, & Turkey at BP, on the historic operations in Azerbaijan, the country's role as an energy hub, and the prospects at Shah Deniz.
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HE Ali M. Abbasov, Minister of Communications and Information Technologies, Azerbaijan
TBY talks to Ali M. Abbasov, Minister of Communications & Information Technologies, on the success and achievements of the ICT sector in 2012 and the initiatives to become a leader in non-oil industries in 2013 and beyond.
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Chingiz Huseynzada, Vice-President , Azerbaijan National Olympic Committee (NOC)
TBY talks to Chingiz Huseynzada, Vice-President of Azerbaijan's National Olympic Committee (NOC), on success during London 2012, the preparation for the first European Olympic Games, and international events being hosted in the country soon.
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Elkhan Mammadov, General Secretary, Association of Football Federations of Azerbaijan
TBY talks to Elkhan Mammadov, General Secretary of the Association of Football Federations of Azerbaijan (AFFA), on the FIFA U-17 Women's World Cup, developing sports in the country, and upcoming sporting events that Azerbaijan will be hosting.
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Halil Duru, General Coordinator, Gilan Tourism & Qafqaz Hotels and Resorts
TBY talks to Halil Duru, General Coordinator of Gilan Tourism & Qafqaz Hotels and Resorts, on promoting the Qafqaz brand internationally, the hospitality sector in Azerbaijan, and the tourism investment climate.
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