Cablegate: Azerbaijan Commercial Update, November 15 - 30, 2007

VZCZCXRO7593
RR RUEHLN RUEHVK RUEHYG
DE RUEHKB #1460/01 3440853
ZNR UUUUU ZZH
R 100853Z DEC 07
FM AMEMBASSY BAKU
TO RUEHC/SECSTATE WASHDC 4403
INFO RUCNCIS/CIS COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 2498
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUEHBS/USEU BRUSSELS

UNCLAS SECTION 01 OF 05 BAKU 001460

SIPDIS

SIPDIS

DEPT FOR EUR/CARC
DEPT PASS TO TDA FOR STEIN, EXIM FOR GLAZER
ANKARA FOR FCS
COMMERCE FOR 4231 ITA/MAC/ORUE FOR DSTARKS
COMMERCE FOR 3004 ITA/FCS/ ADVOCACY FOR ACHAMS-EDDINE

E.O. 12958: N/A
TAGS: ECON EINV ETRD ENRG EFIN AJ
SUBJECT: AZERBAIJAN COMMERCIAL UPDATE, NOVEMBER 15 - 30, 2007

1. SUMMARY: This information is drawn primarily from the
Azerbaijani local press, and has not been checked for accuracy. The
opinions and policies expressed in this report are those of the
authors, not the U.S. Government. END SUMMARY.

- SOUTH-KOREAN ENERGY PROJECT
- ADB HIGHWAY PROJECT
- TRANSPORT INVESTMENTS USD 1 BILLION
- AGRICULTURAL STATISTICS FOR JANUARY-OCTOBER 2007
- FDI TOTALS USD 4.7 BILLION IN JAN-OCT 2007
- CARGO TRANSIT FALLS
- CONSULTANT FOR SECOND IPP
- GOVERNMENT BUYS 10 PERCENT IN THE GARADAGH CEMENT PLANT
- POWER PRODUCTION TO INCREASE IN AZERBAIJAN IN 2008
- MILK-PRO'S NEW MILK FACTORY
- CASPAR PROCUREMENT
- CASPAR PLANS CASPIAN SHIPBUILDING FACTORY
- HEALTH MINISTRY EOI FOR MEDICINE QUALITY CONTROL LABORATORY
- TENDER FOR AN AUTOMATED OBSOLETE DOCUMENTS REGISTER
- GEYCHAY TELECOMMUNICATION CENTRE TENDER
- STATE BORDER SERVICE TENDER FOR CLOTHING
- MINISTRY OF HEALTH TENDER FOR MEDICAMENTS AND PRODUCTS
- MINISTRY OF HEALTH TO PURCHASE EQUIPMENT AND FURNITURE
- MINISTRY OF HEALTH TENDER FOR MEDICAMENTS AND EQUIPMENT
- ROAD REHABILITATION AND REPAIRS TENDER
- MINISTRY OF HEALTH TENDER TO PURCHASE MEDICAMENTS
- MINISTRY OF HEALTH TENDER TO PURCHASE DRUGS
- REAL ESTATE REGISTER SERVICE TENDER FOR DIESEL GENERATORS
- MINISTRY OF FINANCE TENDER FOR AIR VENTILATION SYSTEMS
- ZAGATALA TENDER FOR RECONSTRUCTION OF STREETS
- GEYCHAY TENDER FOR CENTRAL AUTOMATIC TELEPHONE EXCHANGE
- MINISTRY OF HEALTH TENDER FOR MEDICAMENTS
- NATIONAL ONCOLOGY CENTER TENDER FOR MEDICAMENTS
- MINISTRY OF HEALTH TENDER FOR JALILABAD HOSPITAL

2. SOUTH-KOREAN ENERGY PROJECT
------------------------------

The Azerbaijan Investment Company and Korean company "Kepco" will
sign an MoU on the construction of a private power station in Alat
(site of Azerbaijan's new commercial port). The project is
estimated to be worth USD 750 million to 1 billion. The power plant
will be financed privately by Kepco and other potential investors.
The 700-mega-watt power plant will sell power to a number of local
energy distribution networks.

3. ADB HIGHWAY PROJECT
--------------------

The Government of Azerbaijan and the Asian Development Bank (ADB)
are expected to sign the Multitranche Financing Facility (MFF) for
the Azerbaijan highway system, including the Masalli-Astara highway,
in mid-December. The state AzerYolServis OJSC is conducting
pre-qualification of contractors for the first stage. The
consultant will start work in January and prepare tender procedures
by mid-2008. Construction is expected to start in 2008. U.S.-based
Terra's feasibility study proposed constructing a new
sixty-kilometer four-lane highway to run in parallel with the old
road that that is to be rehabilitated. Total cost of the
243-kilometer Alat-Astara highway reconstruction project is
estimated at USD 400 million.

4. TRANSPORT INVESTMENTS USD 1 BILLION
--------------------------------------

The Government of Azerbaijan has budgeted up to USD 1 billion for
transportation projects in 2008, compared to the expected USD 600
million in 2007. The program includes highway, railway, and general
transportation projects as vital components of the north-south and
east-west transport corridors, renewal of the maritime and aviation
fleet, and commencement of construction of a new international
seaport. A special railroad development program is estimated at USD
1.2 billion and will be implemented in 2008-2011.

5. AGRICULTURAL STATISTICS 2007
-------------------------------

The Azerbaijani State Statistics Committee reported that as of
November 1, grain production had reached 1.846 million tons of grain
crops from 705,100 hectares. For the reported period, vegetable
yield increased by 4.5percent and reached 1.182 million tons.

BAKU 00001460 002 OF 005

Harvest of potatoes grew by 0.7 percent and totaled 1.013 million
tons. Fruit and berry production was up 5.3 percent and reached
515,200 tons. According to Agriculture Minister Ismat Abbasov, the
government has allocated 30m manats to promote corn production in
Azerbaijan. Cotton production has been declining in recent years,
which the Government links to the global decline in the price of
cotton.

6. FDI TOTALS USD 4.7 BILLION
------------------------------

According to the GOAJ, foreign direct investment in Azerbaijan
totaled USD 4.7 billion in the first 10 months of 2007 (USD 1.01
billion in the first quarter and USD 2.448 billion in the second).
FDI made up 63 percent of overall investments. Oil and gas
investments grew by 9.9 percent and made up 58.3 percent (USD 2.859
billion) of all foreign investments. FDI in the non-oil sector
reached USD 233.4 million (a decline of 12.2 percent).

7. CARGO TRANSIT FALLS
-----------------------

Cargo transit through Azerbaijan totaled 4.847 million tons in Jan -
Oct 2007, a drop of 478,800 tons or 11.38 percent from the similar
period of 2006. The State Customs Committee reports that a major
part of transit goods was dispatched to Italy (1.42 million tons),
Switzerland (1.3 million tons), Georgia (980,600 tons), Tajikistan
(362,300 tons), Turkey (201,100 tons), Iran (160,000 tons), Russia
(116,900 tons), Turkmenistan (123,400 tons), and Kazakhstan (78,100
tons). Exports: 674,600 tons - by sea, 2.908 million tons - by
rail, 592,300 tons - by road, 3,100 tons - by air, and 5.312 million
tons via pipelines. Imports: 5.53 million tons - by rail, 336,100
tons - via pipelines, 1.139 million - by road, 90,600 tons - by sea,
and 21,600 tons - by air.

8. CONSULTANT FOR SECOND IPP
-----------------------------

The Azerbaijani government is set to select a consultant to assist
with the preparation of the tender procedure for the construction of
the second independent power producer (IPP). The competing
consortiums are: BNP Paribas/Allen & Overy/MGB/Mott MacDonald,
Latham & Watkins/Taylor-DeJongh Inc./Jacobs Consultancy, and Societe
Generale/PB Power/OMNI/LeBoeuf, Lamb, Greene & MacRae.
Consultations involve technical, financial and legal aspects of the
project, preparation of tender documents and draft agreements, and
their coordination with potential investors. Among the bidders for
the second power station to be constructed in Ganja or Sumgayit are
International Power, Sumitomo Corporation, AES and Hanwa. IPPs are
expected to produce up to 20-25 percent of Azerbaijan's expected
energy system capacity of 8,000-10,000 MWt.

9. GOAJ BUYS PART OF GARADAGH CEMENT
-------------------------------------

Heydar Babayev, Minister of Economic Development, announced that the
Azerbaijan Investment Company (AIC) is set to purchase 10 percent of
ownership in the Garadagh Cement Plant from Swiss owner, Holcim.
Currently, the plant's ownership includes Holcim (79.5 percent),
EBRD (10 percent) and a group of small minority shareholders. AIC
plans to participate in the reconstruction of the plant and the
construction of a new cement plant. The new plant with annual
capacity of 1 million tons is expected to cost 150 million EUR.
Azerbaijan's annual cement demand is 4 million tons.

10. POWER PRODUCTION SET TO INCREASE IN 2008
--------------------------------------------

The state power producer Azerenerji expects to produce 21 billion
kilo-watt hours of energy in 2008, compared to 20 billion kilo-watt
hours in 2007. The company forecasts growth of consumption due to
introduction of new enterprises and production expansion at present
enterprises. Azerenerji believes it could fully satisfy the
domestic demand. Azerbaijan currently does not import power and has
limited power exchange with Russia and Turkey (for Nakhchivan).

11. MILK-PRO'S NEW MILK FACTORY
-------------------------------

Milk-Pro LLC, with support of Azerbaijan Investment Company (AIC)
and European Bank for Reconstruction & Development (EBRD), started

BAKU 00001460 003 OF 005

construction of a new milk-processing factory in the Hovsani
settlement of Baku. AIC reported that the enterprise is expected to
have capacity of up to 150 tons a day. The factory is expected to
be operational in the second half of 2008.

18. CASPAR Procurement
----------------------

The Caspian International Sea Steamship Line of Azerbaijan (CASPAR)
announced that is has purchased three new ferries, scheduled for
delivery in early 2008. CASPAR has plans to purchase up to 11 new
ships as part of its modernization plans in the next three years.
CASPAR's current fleet consists of 75 major and 34 minor ships.
Their total deadweight is 480,000 tons.

19. CASPAR Plans Caspian Shipbuilding Factory
--------------------------------------------- -

CASPAR announced plans to construct a Caspian Shipbuilding Factory
in the Alat settlement, the location of the new Baku port. The
factory will be able to build and service a wide range of ships -
from yachts to gross tankers, including those to transport Kazakh
and Turkmen oil. The Korean STX and the Azerbaijan Investment
Company (AIC) will implement the project. AIC is set to own 25
percent of the project.

20. HEALTH MINISTRY PROCUREMENT
--------------------------------

The Ministry of Health of Azerbaijan has announced an expression of
interest (EOI) procedure for purchase and installation of equipment
in the Medicine Quality Control Laboratory within WBG Health Sector
Reform Project (HSRP). For more information contact fm@ednet.az or
call +99412 431 6121 (fax: +99412 431 1937). The USD 50 million
HSRP is the WB largest investment in country's social sector. Total
cost of the project is $86.75 million and 83% of its budget will be
directed for medical and social services, 14% for central
administration management, 3% for governance with compulsory medical
payments.

21. JUSTICE MINISTRY TENDER
----------------------------

The State Population Register Service under the Ministry of Justice
of Azerbaijan has announced a tender for a concept-based plan and
Technical Design Assignment on automation of obsolete documents
register. The documents should be submitted at the address: 36,
Samad Vurgun Street, Baku. The tender procedure will take place at
4:00 pm November 30, 2007. Contact phones: 596-39-18, 596-39-34.
Contact person: Elnara Ahmadova.

22. GEYCHAY TELECOMMUNICATION CENTRE TENDER
---------------------------------------------

Geychay Telecommunication Center (Aztelekom) of the Ministry of
Communications & Information Technologies has announced a tender on
quotation method for connection of rural electronic exchange lines
and purchase of equipment 5 FOM-4 and 1 FSM-32 for use of free
capacity area. Deadline: November 30, 2007. For more information
apply to Center's Quotation Commission. Contact phones: (167)
5-44-99, 5-33-33, 5-23-66 (fax).

23. STATE BORDER SERVICE TENDER FOR CLOTHING
---------------------------------------------

The State Border Service of Azerbaijan has announced a tender
procedure for border guard clothes for 2008. Estimate criteria:
profitable price, ecologically clean product, observation of the
agreement conditions and date. Deadline: 4:00 pm December 22, 2007.
Address: 30, Azerbaijan Avenue, Baku; Frontier Service building.
Unsealing of bids will take place at 3:00 pm on December 28, 2007.
For more information please contact I. Akbarov and Z. Jafarov at
call (+99 412) 493-53-53; 498-01-32.

24. MOH TENDER FOR MEDICAMENTS AND PRODUCTS
--------------------------------------------

Ministry of Health of Azerbaijan announced tenders to purchase
medicaments and products for Bilasuvar Regional Hospital and Ali
Bayramli City Hospital for 2008. Bilasuvar Deadline: 6 PM, December
17, 2007. Contact addresses: Bilasuvar, 82, H. Aliyev Street. Ali

BAKU 00001460 004 OF 005

Bayramli deadline: 5 p.m, January 7, 2007, address: Ali Bayramli,
16, H. Aliyev Avenue. Contact phone: (0197) 5-03-58. Contact
person: T.E.Aliyev.

25. MOH TO PURCHASE EQUIPMENT AND FURNITURE
--------------------------------------------

Ministry of Health of Azerbaijan announced a poll by quotation
method to purchase goods, equipment, and furniture for Guba Central
Regional Hospital for 2008. Tender commission informed that the
tender is announced by 10 lots: to purchase stationery and carry out
disinfection services; printing and typographic products; all types
of goods and materials; construction materials; repairs of
transportations; purchase of spare parts and oils; communal and
communicational services; purchase of smooth inventory, bedroom
outfit; furniture; kitchen outfit; baby food. Deadline: December
15, 2007. Address: Guba, 12, Fatalikhan Street. Contact phone:
(169) 5-29-58 (fax: (169) 5-19-70).

26. MOH TENDER FOR MEDICAMENTS AND EQUIPMENT
---------------------------------------------

Ministry of Health of Azerbaijan announced a tender to purchase
medicaments, equipment, and products for Guba Central Regional
Hospital for 2008. MOH intends to purchase narcotics, anesthesia,
and psychotropic drugs, diabetes drugs, general group medicaments
and bandages, medical oxygen, medical outfit, X-ray film and
reagents, bakery goods, inferior medical equipment, devices, tools
and their installation and repairs, major repairs of social, and
other items. Deadline: December 27, 2007. Address: Guba, 12,
Fatalikhan Street. Contact phone: 169-5-29-58 (fax: (169)
5-19-70).

27. ROAD REHABILITATION AND REPAIRS TENDER
-------------------------------------------

City of Khirdalan has announced a two-lot tender procedure for
rehabilitation and capital repairs of internl district roads.
Deadline: 5 PM December 25, 207. Address: 7, M. Rasulzadeh
Street, Khirdalan Contact phone: (0160) 5-20-01.

28. MOH TENDER TO PURCHASE MEDICAMENTS
---------------------------------------

Ministry of Health of Azerbaijan announced a tender to purchase
medicaments for Gabala Central Regional Hospital for 2008.
The tender is announced by two lots: to purchase general group drugs
against diabetics, medical outfit and to purchase narcotics,
anesthesia, and psychotropic drugs. Those who want to take part in
the tender must submit the documents till December 27, 2007, 3 p.m.
to the address: Gabala, 12, A.Sakhat Street. Tender proposals will
be submitted till January 9, 2008, 6 p.m.

29. MOH TENDER TO PURCHASE DRUGS
---------------------------------

The Ministry of Health of Azerbaijan has announced tender procedures
for purchase of medicaments, bandages and products for Salyan and
Ujar central regional hospital and a goods poll for Ujar central
regional hospital for 2008. Required jobs are: repairs and
construction, purchase of hard inventory, products and bakery, motor
spare parts, farm products, stationery, firewood. First tender
deadline: December 27, 2007. Address: 93, Dada Gorgud Street, Ujar.
For more information call 5-01-71. Contact person Ya. Kerimov.
Second tender deadline: December 27, 2007. Address: Salyan Highway,
Neftchala central district hospital. For more information call
2-38-485. Contact person A.Askerova .

30. REAL ESTATE REGISTER SERVICE TENDER
----------------------------------------

The Real Estate Register Service of Azerbaijan has announced a
tender procedure for purchase of diesel generators. Capacity of 11
generators should be 40-50 KV and six generators 75-85 KV. The
applicants can receive additional information at the address: 1A,
Z.Khalil, Baku; Real Estate Register Service. Deadline: December
20, 2007. Contact person: Emil Mammadov:
emil.mammadov@hotmail.com, spanahov1@yahoo.com. Telephone and fax:
+994 12 514-05-71.

31. MOF TENDER FOR AIR VENTILATION SYSTEMS

BAKU 00001460 005 OF 005

-------------------------------------------

The Ministry of Finance of Azerbaijan has announced a tender
procedure for installation of air conditioners and ventilation
system in its administrative building. Deadline: 10 pm December 24,
2007. Address: 83, Samed Vurgun Street, Baku. For more information
call 493-96-48 (fax: 93-05-62) (from 10 am till 5 pm; from November
12 to December 24, 2007).

32. ZAGATALA TENDER FOR RECONSTRUCTION OF STREETS
--------------------------------------------- -----

Zagatala region executive power has announced a two-lot tender
procedure for refurbishment of streets and for improvement,
landscape gardening and lighting in the city. Deadline: 5 pm,
January 7, 2008. Address: Zagatala regional executive office.

33. GEYCHAY TENDER FOR TELEPHONE EXCHANGE
------------------------------------------

Geychay Telecommunications Centre has announced a tender procedure
for full reconstruction of Geychay central district automatic
telephone exchange. Deadline: 5 pm, January 3, 2008. Address: 112,
A.Kerim Street, Geychay. For more information call (167) 5-33-33.

34. MINISTRY OF HEALTH TENDER FOR MEDICAMENTS
--------------------------------------------- -

Ministry of Health of Azerbaijan announced tender to purchase
medicaments and products for Masalli Central Regional Hospital for
2008. The tender is announced for 4 lots: to purchase medicaments
for diabetics, general group medicaments and bandages, reagents,
X-ray and laboratory tools, prophylactic serums. Deadline: January
6, 2008. Address: Masalli, 100, Dadva Street. Contact phone:
5-33-63.

35. NATIONAL ONCOLOGY CENTER TENDER FOR MEDICAMENTS
--------------------------------------------- -------

Ministry of Health of Azerbaijan announced tender to purchase
medicaments for National Oncological Center for 2008.
Deadline: 6 p.m., December 28, 2007. Address: Baku, Yasamal
district, 10, Sharifzadeh Street. Contact phone: +99412 432 3941.
Contact person: Yusif Babayev.

36. MINISTRY OF HEALTH TENDER FOR JALILABAD HOSPITAL
--------------------------------------------- --------

Ministry of Health of Azerbaijan announced tenders to purchase
medicaments, bandages, and products for Jalilabad Central Regional
Hospital and Ganja city Health Department for 2008.
The first tender is announced to purchase general group medicaments
and bandages, diabetic drugs, reagents and X-ray tools, narcotic
medicaments, psychotropic medicaments, antibiotics and disinfection
drugs. The second tender is announced to purchase products,
medicaments and bandages.
Deadline for the first tender 5 PM, January 10, 2008. Address:
Jalilabad region, 4, Sport Street. Contact phone: 3-46-03. Contact
person: Ilkham Aliyev. Deadline for the second tender 5 PM, January
4, 2008. Address: Ganja, 40, Nizami Street. Contact phone:
56-55-33. Contact person: Gulnaz Abbasova.

DERSE

© Scoop Media