State eyes transit routes as potential revenue source

The government of Azerbaijan sees large-scale infrastructure and transport projects being realized in the country and region among the major sources of revenues as the expansion of routes increases the country’s attractiveness.

TRACECA National Secretary in Azerbaijan Akif Mustafayev said that the country plans to get huge revenues from its transit potential noting that Azerbaijan is currently moving in right direction.

Mustafayev noted that there will always be a need for trade, which is ensured by transportation.

Azerbaijan is considered the most geopolitically important and promising country of the South Caucasus. The country is the undisputed leader of the region for its most important location in the Caspian basin and South Caucasus, which enjoys rich geoeconomic potential.

Azerbaijan has already succeeded in the implementation of large-scale projects on the creation of international corridors and modernization of relevant infrastructure within the country.

Mustafayev, commenting on the speech of President Ilham Aliyev at panel discussions during the Munich Security Conference, said that the head of state gave an insight into large scale projects being implemented in the sphere of transport, mentioning such projects as the Baku-Tbilisi-Kars (BTK), the construction of the Baku International trade port in Alat settlement, as well as operation of the shipyard, which will be able to meet domestic demand as well as needs of other Caspian littoral states.

President Aliyev emphasized that natural resources are a temporary phenomenon, saying that transit is much more valuable than natural resources because natural resources will come to an end sooner or later.

“If you have a reliable and modern infrastructure for transit you will earn money just taking advantage of your territory and investment which you make,” the president said.

Mustafayev emphasized that the president pointed to not only current projects, but also the future prospects.

“All strategies, covering development of the logistics, trade and transport are reflected in the recently approved Strategic Road Maps,” he said.

The Strategic Road Map for the development of logistics and trade in Azerbaijan is expected to ensure a GDP growth by roughly 605 million manats ($ 348.6 million).

The objectives include the creation of a favorable environment for the increase of trade turnover, getting of higher value added from transit operations, as well as the introduction of a mechanism for the implementation of measures in the sphere.

Mustafayev also touched upon the restoration of the Great Silk Road, the “One Belt, One Road” initiative of China, mentioning that all Eurasian countries are currently engaged in talks on the issue.

The initiative focuses on connectivity and cooperation among countries primarily between China and the rest of Eurasia. The expert recalled that back in 1998 Baku hosted International summit “TRACECA – Restoration of the Silk Road” initiated by national leader Heydar Aliyev.

“The participants adopted a strategically important document which regulates transit issues, tariffs and others. I want to emphasize that the whole world is currently discussing the project, which was initiated by Heydar Aliyev,” he said.

Mustafayev also talked about the competition between the transport corridors.

“There is a route from Kazakhstan, Russia, and Belarus and further to Europe as well as the route through Azerbaijan, which is the shortest one. But it is not the cheapest one. We should regulate certain issues, including unification of tariffs to make the route attractive from a commercial point of view” he said.

The route through Caspian, China, Kazakhstan, Azerbaijan, Georgia, and Turkey is 15 days shorter than the existing route. Azerbaijan has always played active role in the reconstruction of its segment of the Silk Road. This year the country plans to commission a very important part of the Silk Road – connection between Baku, Tbilisi and Kars.

The BTK project is expected to be commissioned by mid 2017 with the initial bandwidth capacity of 6.5 million tons, while the volumes may reach some 35 million tons a year in medium term perspective.