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Country Commercial Guides
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CHAPTER V. LEADING SECTORS FOR U.S. EXPORTS
The following comments pertain essentially to all sectors. While there is significant demand for the following general product categories over time, financing immediate sales is a difficult prospect. Most of the Best Prospect categories contained herein have strong GOAZ involvement. While many studies have been conducted and plans prepared that deal with modernization and upgrading, purchase contracts are coordinated and awarded according to priority and available financial resources. For this reason, forecasting precise categories of sub-sectors and quantities to be purchased/imported is extremely difficult and speculative. Previous years imports have little significance on what will happen this year or next. Other statistical data is limited or unreliable. While there is virtually no local manufacturing to compete against, current equipment in some sectors came into use during Soviet times, therefore, products manufactured in Russia or other countries that were members of the former Soviet Union tend to be more compatible and less expensive. Competition from Europe and Asia is high and often tied to foreign aid or other financing schemes. U.S. Suppliers offering attractive financing packages will be more successful in Azerbaijan than those seeking cash sales only.
A. Best Prospect Sectors for Non-Agricultural Goods and Services:
1. Oil/gas field machinery (OGM): This was the leading U.S. export category in 1998. Included were winches, capstans, jacks, and their parts; rotary and stationary air and vacuum compressors, and parts; and reciprocating positive displacement oil well and oil field pumps. Due to extensive development both, on and offshore, this sector will remain at the top of the Best Prospect Sectors List that includes almost all types of equipment related to the exploration, extraction, extraction and transportation of oil and gas.
Oil: The development of Azerbaijan's vast energy resources rests with SOCAR (State Oil Company of the Azerbaijan Republic). Because of the enormous cost required to explore, extract and transport oil and gas, neither SOCAR or many of the worlds energy companies have the necessary resources to undertake this task individually. For this reason, and also to spread the risk, consortia were formed to carryout this function. In 1994, a consortium of 11 major companies (AMOCO, BP, EXXON, Pennzoil, Unocal, LIKoil, Ramco, Itochu, Turkish Petroleum AO, and Delta-Nimir) joined to form the Azerbaijan International Operating Company (AIOC). AIOC subsequently signed a 30-year, US$8 billion Production Sharing Agreement (PSA) with SOCAR to develop three offshore oilfields. Since that time, the Azeri parliament has ratified 14 additional offshore PSAs and 4 onshore PSAs totaling more than US$34 billion with other consortia to explore oilfields in the Caspian basin.
Each PSA, while similar, is different and sets forth the conditions and regulations under which the consortia will operate. It includes such things as percentage of ownership, taxation, exemption from duties, the number of wells to be drilled, among others. These PSAs are ratified by parliament as "laws of the land" intended to insulate the participants from the vararies of future changes in Azerbaijan's other laws.
These PSAs are very specific regarding the timeframe in which drilling is to begin and the number of wells to be drilled. There is currently a considerable backlog in the number of wells to be drilled over the next few years. Present rig capacity will allow only four - six wells to be drilled per year. While some additional capacity can be gained through upgrading existing rigs and equipment, the future need exceeds the available equipment pool by a considerable number. Because of continued uncertainty regarding the exact potential at each site, firms are reluctant to go to the expense of bringing in additional rigs, electing instead to rely on the pool of equipment already in Azerbaijan and performing upgrades to increase the available capacity. Also, there are indications that floating production systems may be placed into use in the future.
AIOC plans to continue the first phase of the full field development of Azeri, deep-water Gunashli, and Chirag fields next year. This includes the drilling of additional wells, the development of these structures, and transportation pipelines.
Usually, the nineteen consortia register companies as possible subcontractors and suppliers and award purchase contracts accordingly. Often, a single sub-contractor will be named that will make and coordinate the purchase of all equipment and supplies required by a consortia during the course of the year. The consortia and their sub-contractors give priority to those companies that have an established presence in the country and a knowledge of local business practices; that have demonstrated their commitment to the country and the consortia by active community involvement, and that can show a successful track record in the participation or completion of similar projects. Companies interested in providing equipment and services to consortia are encouraged to contact those consortia and register their companies as future suppliers and demonstrate their presence. If selected, many of the provisions set forth in the respective PSAs, such as exemption from import duties, will usually extend to the subcontractors and suppliers as well.
The consortia have established a "Coordinating Council" to review issues of common interest to the member companies and address those issues to the government and other relevant organizations. Currently the Coordinating Council operates as an independent consultant to the GOAZ. The World Bank has expressed interest in the possible financing of this organization.
The Coordinating Council has also proposed a Revenue Sharing Agreement which suggests establishing a special framework agreement for foreign companies that would set up joint ventures with local oil and gas machinery manufacturing plants in need of restructuring and financing. In turn, the Government would provide certain incentives to these joint ventures, similar to the conditions of the Production Sharing Agreements. This proposal is currently under review by the Cabinet of Ministers.
Following is a listing of the Oil Consortia: 1) Azerbaijan International Operating Company (AIOC); 2) Shakh-Deniz; 3) Lenkoran-Talysh Deniz; 4) Apsheron; 5) Nakhchivan; 6) Yalama; 7) Oguz; 8) Kurdashi; 9) Jenubi-Garbi Gobustan; 10) Kursangi and Garabagly; 11) Muradkhanli, Jafarli, and Zardab; 12) Inam; 13) Araz, Alov, and Sharq; 14) Ateshgah, Yanan Tava, and Mugan Deniz; 15) Zafar, Mashal; 16) Savalan, Dalga, Lerik Deniz, Janub; and 17) Padar. (Refer to Chapter XIII, Appendix H for a listing of shareholders and their respective shares in each consortium.)
NOTE: Two other consortia - CIPCO and NAOC have been dissolved because of disappointing results in test wells drilled at their sites.
Gas: Because natural gas is the main fuel used in Azerbaijan, its availability is crucial to all aspects of economic activity. Because of this, the government has placed a high priority on upgrading the country's natural gas infrastructure and improving the efficiency of gas use.
As a result of a heavy investment during the Soviet area, Azerbaijan is one of the most gasified countries in the world. Its gas transmission/distribution network extends to over 80 percent of the population, and comprises 4,500 km of high pressure transmission lines, 7 compressor stations and over 31,000 km of medium and slow pressure distribution lines.
While the country was at one time self-sufficient in gas, declining oil and gas production in recent years has led to a need for substantial gas imports to meet increasing supply shortfalls. As in many countries of the former Soviet Union, the gas transmission and distribution sub-sectors in Azerbaijan are in need of substantial investment for modernization and rehabilitation. Technical and non-technical losses result in at least 15 percent of the gas supply not being accounted or billed to customers. Parts of the system suffer from severe corrosion, and it is estimated that significant volumes, as much as 5 percent, are lost through leaky pipes, with adverse impacts on the environment and public safety.
The national gas company, "Azerigas", who controls all transmission and distribution, has experienced severe financial difficulties due to low gas selling prices for residential consumers and large payment arrears. The rapid increase in the cost of imported gas since the break-up of the Soviet Union has also reinforced the priority of reducing consumption through improved efficiency.
Pipelines: Once oil and gas have been successfully extracted, the need remains to transport it to refineries where it can be converted to fuel, lubricants, petro-chemicals and other downstream products, or burned, in the case of gas. It was clear that Azerbaijan needed to develop a cost-effective, main transportation system to meet the expected export demand for its oil and gas to international markets over the next decade.
Until the region's full production potential could be developed, it was decided to utilize two existing export routes for the transport of Early Oil to the west. They were the Northern Export Route (NER) and the Western Export Route (WER). The NER is a 20/28" dia. pipeline extending from Baku through Russia to the Black Sea port of Novorossiysk. Originally stretching from Grozny to Baku, it was completed in 1983 as part of the Soviet supply system. In 1996, it was upgraded and connected the Sagachal Terminal to the Grozny-Baku pipeline allowing the shipment of Azeri crude to the Black Sea Port of Novorossiysk. It's current capacity is 100 kbd (thousand barrels per day).
The WER is a 20" diameter pipeline passing through Azerbaijan and Georgia to the Port of Supsa, also on the Black Sea. Completed in April 1999, it added an additional 100 kbd of transport capacity.
The capacity of both pipelines can be increased an additional 100 kbd each by installing addition pumping stations. The decision to increase the capacity of either route will depend on the commercial terms available, the pace of upstream (?) development, and when a new main export pipeline (MEP)becomes available. However, even if the current pipelines are upgraded, the total capacity will be only 400 kbd, far short of the anticipated future increase in production. Once AIOC shifts from its current level of Early Oil production to Full Field Development, its output is estimated to be 600-800 kbd. In addition, the other PSA holders are scheduled to begin production early in the next millenium. If significant new volumes of oil are discovered, the transport problem will be greatly exacerbated.
To address this problem, a new MEP will be required. Because of the projected volume of crude that will need to be transported, the joint effort and cooperation of the regional governments and oil companies will be required. Accordingly, studies have been conducted to examine and evaluate the possible alternate routes for the MEP. Included have been engineering and design standards, the topography and use of land through which the proposed routes would pass, construction methods, schedules, and costs, operating cost estimates, and projected revenues.
As a result of these studies, three primary routes have been identified; Baku to Supsa, Baku to Ceyhan, and Baku to Novorossiysk. The Baku to Supsa route essentially follows the existing WER from Baku west through Azerbaijan and Georgia to Supsa, a length of approximately 528 miles. The route from Baku to Ceyhan, favored by the U.S., again follows the WER to a point midway through Georgia where it then turns south, crossing Turkey to the Mediterranean port of Ceyhan, a distance of 1223 miles. The final route, Baku to Novorossiysk, follows the NER north from Baku to the Russian border, then northwest to Novorossiysk, a total of 838 miles. However, this northern route's prospects have been greatly discounted in the wake of recent difficulties and stoppages in the flow of product through the northern early oil route.
Large gas deposits in the Caspian region also provide a solid foundation for economic growth within the region. Russia and Turkmenistan have been the leaders in this sector as Azerbaijan has not been able to produce enough gas in recent years to supply its own needs. In addition to providing gas to Azerbaijan, the focus has been on Turkey - a country of 60,000,000 people - as the primary target market for Russian and Turkmen gas. Azerbaijan's role in the original scheme was that as host to the Trans-Caspian Pipeline, a proposed pipeline linking Turkmenistan to Turkey. It would transport Turkmen gas across the Caspian Sea, through Azerbaijan, and Georgia, and finally to the Turkish market. Later, as Azerbaijan's gas field production increased, it's gas would also flow through this pipeline.
Competing with the Trans-Caspian Pipeline is Bulestream - a project initiated by Gasprom, a Russian gas conglomerate in cooperation with Italy's ENI. In this plan, a pipeline would be built to transport Russian gas across Russia, under the Black Sea to Turkey. ABN Amro Bank has expressed interest in financing this project.
However, recent natural gas discoveries of a significant nature in Azerbaijan's Shakh-Deniz field has changed all this and stands to makes Azerbaijan one of the leading competitors among gas supplying countries in the Caspian region. If Azerbaijan's gas reserves prove to be as substantial as first indicated, it too will be vying for the lucrative Turkish market. In doing so, it may seek its own pipeline rather than share the Trans-Caspian Pipeline with Turkmenistan.
Each project has its advantages and each country is trying to establish a common dialog with Turkey and come to agreement on commercial terms. Since Azerbaijan is geographically closer to Turkey, it's expected that its offer will be more competitive than either Russia's or Turkmenistan's.
The U.S. supports the Trans-Caspian Pipeline as part of it's regional and strategic policy. The development of all the emerging countries is seen as an important stabilizing factor in the Region. In this context, should Azerbaijan become a major gas exporter to Turkey, the U.S. would hope that both Turkmen and Azeri gas could be accommodated along the same Caucasus corridor; otherwise, the only outlet for Turkmen gas would be through Russia where monopolistic Russian companies would dictate non-commercial tariffs for Turkmenistan.
2. Telecommunications equipment (TEL): Significant opportunities for U.S. products and firms exist in this highly competitive market. Most of the telecommunications infrastructure is part of the old Soviet system and, as such, is urgently in need of replacement. In 1993, the Azeri Government initiated steps to modernize and convert the old mechanical system to one that is fully digital. In this regard the Ministry of Telecommunications has adopted a program, Development of Telecommunication by the year 2010, at a cost estimated at US$ 1 billion.
The current density of subscribers is about 20 out of each 100, which is 2-3 times lower than normal. In accordance with the government's modernization program, not only will the old telephone system be converted to a digital one, but also the number of lines and exchanges will be increased to accommodate additional subscribers.
Progress toward implementation of the Plan has been slow because of the lack of funds necessary to purchase and install needed equipment and lines. Because of this delay and the introduction of cellular service, the use of cell phones is increasing rapidly, thus creating an increasingly important sub-sector. There are two providers of cellular service, Azercell and Bakcell (Motorola). Azercell is a subsidiary of Aztelecom, which is controlled by the Minister of Telecommunications.
3. Electrical Power Systems (ELP): Energy in Azerbaijan is totally in the public sector and is run by "Azerenergy", a state-owned, closed Joint-Stock Company. The national power system is comprised of nine thermal power plants and five hydroelectric power stations. Varvarinskaya hydroelectric power station is part of the Mingechaurskaya structure.
Power Station Year Built Capacity per units Number of units Capacity MWt Type Mingechaurskaya 1955 60.00 6 360.00 Hydro Shamkirskaya 1981 190.00 2 380.00 Hydro Araz 1971 11.00 2 22.00 Hydro Ter-ter 1977 25.00 2 50.00 Hydro Azerbaijan 1981 300.00 8 2,400.00 Thermal Ali Bayramli 1962 150.00 7 1,050.00 Thermal Severnaya 1954 150.00 1 150.00 Thermal Baku 1 1928 40.00 2 80.00 Thermal Baku 2 1952 6.00 4 24.00 Thermal Sumgait 1 1952 50.00 4 200.00 Thermal Sumgait 2 1966 60.00 2 Thermal Sumgait 2 50.00 2 220.00 Thermal Gandja 1962 30.00 3 90.00 Thermal Total: 5,026.00
The length of electricity transmission lines exceeds 110,000 km, including over 2,000 km with 500-300-220 capacity; and , 13,000 km with 110135 KW. Forty structural network subdivisions carry out the distribution of electricity. The power grid is capable of generating 23 billion KWh of electricity per year. Azerbaijan has electric connections with the neighboring power grids of Dagestan (Russian Federation) and Georgia via 330 KW Electricity Transmission lines.
Previously a part of the Soviet energy system, the existing infrastructure is outdated and there has not been significant change or renewal of equipment. Azerbaijan imports about 98% of its energy generating and distribution equipment and parts from Russia and the Ukraine, Since they all were originally part of the same system, the parts are compatible and very price-competitive.
Combined-cycle gas-turbine units need to be improved in order to enhance the fuel efficiency of thermal power plants. Realizing that Azerbaijan will not be able to finance such a massive upgrade program itself, which is estimated at $2.5 billion, it seeks potential foreign investors to jointly undertake these projects.
A five-year program has been designed for privatization. "Azerenergy" will convert into an open joint stock company (JSC) after its outstanding debts are paid to the state budget. Initial stage of privatization will cover transmission networks although it is believed that power stations will be state-owned for a while.
Renewable energy is not characteristic to Azerbaijan. Although several projects have been discussed in the past, there have not been any developments until recently. An agreement has been signed between "Azerenergy" and "Sumitomo" for a renewable energy project for wind energy. A test project will be run for two years and if the results are attractive three stations will be built. Currently preparations are underway for the test project.
4. Telecommunications services (TES): Rapidly expanding communications needs, including the development of Internet access, offer good prospects for U.S. companies. The growing number of foreign companies established in Azerbaijan represent a high-value demand for such services.
Currently there are four joint ventures offering telephone services, two cellular operators, and a good number of ISPs (Internet Service Providers) operating in Azerbaijan. All these ventures are established with the Ministry of Telecommunications. They provide fax, voice, data, paging, switch network, GSM and analogue services. Prices for the services vary due to changes in the cost of services offered by the Ministry to these companies. The average ISP price is $3.00 per hour. Although 33.6KB is available, speeds will vary depending on the quality of the telephone connections and traffic.
Companies are reminded of the dual nature of the Ministry of Telecommunications. The Ministry is a policy-making institution in addition to its involvement in commercial activities.
5. Food Processing and Packaging Machinery (FPP): A wide variety of crops are grown in Azerbaijan, Among them are fruits (apples, cherries, grapes, olives, lemons, persimmons, melons, raspberries, strawberries, currants, plums, peaches, pears, and pomegranates); vegetables (tomatoes, potatoes, carrots, beets, cabbage, cucumbers and onions); grains (wheat, maize, barley); tea; nuts. As a result, it has good potential for becoming a major supplier of packaged food products to the CIS and Europe, but lacks the latest food processing and packaging technology needed to realize that potential. Currently, there are 43 canning factories in Azerbaijan producing primarily tomato paste, natural fruit juices and apple concentrate. Most are outdated and urgently in need of upgrading. Many still use glass jars and bottles instead of plastic containers or tetrapacks that are less susceptible to damage in transit, have greater shelf-life, and store better. Because the GOAZ lacks the financial resources (estimated to exceed US$20 million) to underwrite the cost of modernizing this industry, it has been targeted for privatization, thereby, providing significant opportunity for ownership by foreign investors.
To reduce spoilage and damage to the crops while in transit, processing plants are generally located close to the crops they are to process. There are two major areas in which production takes place, Guba for fruits and Lankaran for vegetables. As crops are seasonal, many of the canneries process more than one type of crop. Wine production and bottling is also becoming an important industry for Azerbaijan. Although a relatively large producer of milk, milking equipment and the machinery used to process and package the milk is also in urgent need of modernization and upgrading. Once modernization has taken place and production increased, several of the factories have the potential to earn income from exporting finished products to the other countries of the CIS and to Europe.
American manufacturers of food processing and packaging equipment of small capacities, interested in increasing their export sales, should e-mail their company and product profiles to the Project Management Unit (PMU), Ministry of Agriculture and Food Supplies in Baku (See Chapter XI, Appendix E). This unit is authorized by the GOAZ to send tender announcements to registered companies regarding needed equipment.
Most Promising sub-sectors include:
HS# 8438 Machines for the preparation of fruits, nuts, & vegetablesNote: Azerbaijan uses the metric system. Electric current is 50 cycle, 220/440 volts
HS# 8437 Machines for cleaning, sorting, grading seeds, grains, & vegetables
HS# 8435 Juice extractors
HS# 8422 Machines for filling, closing, & sealing bottles, cans, boxes, bags, or other containers6. Drugs/pharmaceuticals (DRG): Azerbaijan faces a serious shortage of basic drugs. The local pharmaceutical-chemical plant manufactures about 50 types of medications in small volume. The major quantity of medicines imported to Azerbaijan comes unofficially through private pharmaceutical dealers and importers, making it difficult for the State Department of Pharmacy and Medical Production to control the amount and types of pharmaceutical brought into the country. In the near future, a new pharmaceutical plant, an Azeri-Turkey joint venture that is 50% State owned, will begin operation. When it comes on line it will produce more than 100 types of drugs including solutions for intravenous infusion, antibiotics, analgesics, etc. The first samples have already been produced. However, this plant will not be able to fully meet the demand for medicines, and the State Department of Pharmacy and Medical Production is planning to cooperate with two large private companies to help address this problem. These companies currently import and distribute medical products from Russia, Turkey and Europe. Plans call for small production facilities to be created that will produce locally some of the products now being imported.
In 1998 Azerbaijan pharmaceutical imports exceeded $27 million.
7. Water resource equipment (WRE): The World Bank and EBRD are financing a major project to upgrade Baku's water utility to improve the quality and supply to 2.5 million inhabitants. The program focuses on three separate areas: water demand management, strengthening operations and maintenance, and improving water supply and production. A joint-stock company named Apsheron Regional Water Supply (ARWC) has been created in partnership with a western company. This partnership strengthens ARWC's financial position and operational performance, while improving services to consumers and taking advantage of tariff provisions.
As part of that upgrade, the market for water purifying equipment for that project and for private individuals will grow. The annual intake of fresh water from the water reservoirs of Azerbaijan is approximately 16 billion m3. About 1.2 billion m3 are from underground sources, of which there are more than 20 inland water reservoirs on the Apsheron Peninsula. Industrial development and an increase in population has led to formation of numerous settlements which do not have sewage systems or adequate water treatment facilities. Sewage water from these settlements and industrial waste have been discharged into the nearest water reservoirs, which resulted in their contamination by bio-genic elements and toxic substances. Systematic water sampling in different parts of the Caspian Basin show contamination by phenols, oil products, surfactants and others.
Most Promising sub-sectors include:
HS# 842121 Machinery and Equipment for filtering or purifying water HS# 842199 Parts for Machinery and apparatus for filtering and purifying water8. Pollution control equipment (POL): Azerbaijan faces serious pollution problems, particular on the Apsheron Peninsula. International oil consortia and companies involved in on-shore oil development will need anti-pollution equipment, particularly as the development of the fields continue and the transport of crude increases.
According to the Republican Center of Hygiene and Epidemiology, the conditions of the Caspian beaches around Baku are not satisfactory because of high bacteria content. More than 12 billion m3 of contaminated sewage is discharged into the Caspian annually, 95% of which comes from Volga River. Laboratory experiments have been conducted to measure chemical, toxic, radioactive and bacteria levels in the sea. On the first three levels (chemical, toxic and radioactive) none or very minor deviations from the norm were observed. However, the amount of intestinal bacillus in one liter of water at most beaches is much higher than the norm. To help address this problem, the Government of Holland is financing the Baku Bay Cleansing Project and has allocated a $750,000 grant for this purpose. The project plans to facilitate a network of laboratories that would assist the distribution of sewage, industrial and other waste in the sea. The project also encompasses the construction of special channels on the seafloor for waste conservation. The possibility to recycle waste at industrial enterprises is also considered.
The atmosphere in Azerbaijan continues to be threatened by high levels of pollution. The annual discharge of contaminants, depending on the percentage of production capacity being utilized, constitutes from 1.2 to 2.6 million tons of hazardous substances. According to the State Committee of Statistics, hazardous air discharges include 112 thousand tons of solid dust, 93 thousand tons of sulfur dioxide, 638 thousand tons of carbon oxide, 82 thousand tons of nitrogen oxide, 1665 thousand tons of carbons, 37 thousand tons of volatile organic substances. According to the amount and density of air discharges Baku and Sumgayit are in first place. Their air basins are being poisoned by oil refineries, oil chemistry, metallurgy, and construction enterprises. In addition, a significant portion of air contamination is due to inadequately maintained passenger vehicles and motor transport equipment that is totally lacking any form of pollution control equipment.
Most Promising sub-sectors include:
HS# 842139 Air Pollution Control Equipment
9. Computers/peripherals (CPT): Only about 3,000 to 4,000 computers were sold in Azerbaijan in 1998. As privatization and market reforms take hold, the demand for all types of computer equipment and peripherals will increase dramatically. However, without the means by which to finance the purchase of home and business computers, growth will continue to lag. As a result, virtually no computers are used at points-of-purchase.
While large businesses will have the resources to purchase name brand computers, smaller businesses and home users will rely principally on clones that are either imported or assembled locally. Because computers were slow in being introduced to Azerbaijan, they tend to be newer and incorporate current chip architecture and, therefore, are Y2K compliant. Most come fully equipped with modems, sound cards, and CD-ROM readers.
Most Government offices still do not depend on integrated systems to any great degree, consequently, few networks are in use.
Most Promising sub-sectors include:
HS# 8471 Computers, computer parts and peripherals
10. Health care services (HCS): The Azerbaijani public health care system provides very limited service. Private health care services will be needed to serve a growing community of expatriates and affluent Azerbaijanis. The Ministry of Health exercises control over all hospitals, and is responsible for the procurement of medical equipment and disposals. At this time there are a few private clinics in Baku that provide almost all types of health care services. Mediclub was the first private medical service company established in Azerbaijan and is affiliated with Herzliya Medical Center in Israel. This company began operation in 1998 and provides service 24 hours a day and 7 days a week. Services include: all types of emergency treatment, intensive care, pediatrics, minor surgery, laboratory work, ophthalmology, otorhynolaryngologic care, gynecology, physiotherapy, extra corporeal detoxicaton, exercise therapy, vaccinations; ultrasound, endoscopy, fibrobronchoscopy, etc. The facility honors a number of European Middle Eastern insurance companies. In case of necessity, the company provides medical evacuation of patients to the international medical center in Herzliya. Mediclub has three fully equipped ambulances.
The German Medical Center provides emergency care services 24 hours a day and 7 days a week. Staffed by three foreign and two local doctors, the center has one fully equipped ambulance, offers intensive care, and has GYN and pediatrics units, a laboratory, x-ray, EKG, spyrography equipment, etc. The center is managed by AEA international and in case of necessity, provides medical evacuation of patients to European hospitals.
The Turkish-American joint venture medical center is equipped with modern, mostly American manufactured equipment and provides medical services 24 hours a day and 7 days a week. The center is staffed by six Turkish and five local doctors and provides diagnostic and treatment services including computer tomography; colored Doppler ultrasonography and echocardiography; x-ray examinations, mammography; laboratory services; computerized eye scanning and treatment; GYN; pediatrics. The center has a fully equipped ambulance.
Elay-Ankara is an Azerbaijani-Turkish joint venture dental clinic that offers services up to world standards. They started operation in July 1997. The clinic is equipped with modern American, German, Italian, and French medical equipment, and provides full volume dental therapeutic, surgical and orthopedic care for adults and children using modern materials.
Most Promising sub-sectors include:
HS# 9018 Medical equipment, electronic, diagnostic, measuring, etc.
HS# 9019 Ozone, oxygen & aerosol therapy equipment, artificial respiration or other therapeutic respiration apparatus11. Agricultural Machinery and Equipment (AME): The demand for equipment and services related to the growing and harvesting of crops, animal husbandry, and dairy farming will steadily increase as land reform and modernization of the agricultural sector takes place. In addition to fruits and vegetables, Azerbaijan is a major producer of cotton. At present, however, production is only about half of its estimated potential. This is largely due to problems relating to irrigation, inadequate pest control, and inefficiency in harvesting the cotton when ready. Approximately 35% is hand-picked.
The storage and transportation of harvested crops also present problems. There is also a lack of adequate facilities, such as covered, protected, and refrigerated storage areas, aerators, pest/vermin control, etc. Transportation equipment is old and not well-maintained resulting in bruising and other damage to produce enroute to food processing centers or markets. There is also a total lack of refrigerated vehicles. Open-air markets prevail and fail to conform to western health standards. Fresh meat and fish that is not refrigerated, covered, or protected in any way is offered in small shops.
In addition to becoming more self-sufficient, the possibility exists for food exports, which will help generate needed foreign exchange. To help in this regard, the World Bank has instituted a credit line to improve Azerbaijan's agricultural productivity. One of the WB projects - the Farms Privatization Project - deals with loans to farmers. Under this project, short term loans are allotted for seasonal needs, such as buying seeds, fertilizers, etc.; medium term loans are available to help buy agricultural equipment and machinery; while long term loans are more geared to help restore the country's infrastructure and irrigation systems.
Because farming has been privatized, there are approximately 20,000 small farms that are undercapitalized and lack the funds to buy modern equipment. This presents opportunities for foreign investors to enter into joint-ventures with rural private machinery "stations" to which farm equipment could be leased and then rented to individual farmers.
In addition to the need for 'how to" technology and new farm implements and chemicals, there's potential for good used or refurbished farm machinery or equipment. There are no prohibitions against the import of used or refurbished equipment.
Agricultural production (1998 - in thousand tons): Wheat -- 84; Cotton -- 90.3; Tobacco -- 100.9; Potatoes -- 138.8; Vegetables -- 101.5; Melons -- 138.1; Fruit -- 116.5; Grapes -- 99.1; Tea -- 52.4.
Most Promising Sub-Sectors Include:
HS# 8432 Seeders, planters and transplanters
HS# 842121 Machinery and Equipment for filtering or purifying Water
HS# 842199 Parts for Machinery and apparatus for filtering and purifying water
HS# 8433 Harvesting machinery, threshing machinery, & combined harvesting/threshing MachineryB. Best Prospects for U.S. Agricultural Exports: Azerbaijan faces an annual wheat deficit of one million tons. To compensate for its shortfall, it traditionally imports wheat from Russia, Ukraine and Kazakhstan. At present, however, most of Azerbaijan's wheat imports are from the European Union, but U.S. wheat could be competitive under the right terms.
The R. J. Reynolds Tobacco Company has established a cigarette factory in Azerbaijan. Although tobacco is a key Azeri crop, in 1998, it imported $66 million in U.S. tobacco products (USG figure). Cigarette manufacturing is projected to reach 8.439 million sticks by the year 2006.
In addition, fast moving consumer goods, e.g. snack foods and candies, are finding increasingly ready outlets in a number of small stores around Baku.
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[end of document] Note* International Copyright, United States Government, 1998 (or other year of first publication). All rights under foreign copyright laws are reserved. All portions of this publication are protected against any type or form of reproduction, communications to the public and the preparation of adaptations, arrangement and alterations outside the United States. U. S. copyright is not asserted under the U.S. Copyright Law, Title17, United States Code.
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