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Economical news
Bulletine Economics 

2017 November 01 ( Wednesday )  17:18:28
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Русский Azərbaycan


One of Holdings of Family of Nakhchivan Autonomous Republic’s Head Creates New Company

Baku / 01.11.17 / Turan: The group of companies Negsicahan Holding has established the company Uzunoba Restorani. According to the register of commercial legal entities, this holding includes at least 10 companies in the Nakhchivan Autonomous Republic (NAR) and Baku.

The restaurant Uzunoba, according to the page of the holding on Facebook, has been in operation since December 2014. The founders probably decided to transform it into a separate legal entity. The company"s director is Abbas Talibov, who also runs the parent company of the holding. According to unofficial data, Negsicahan Holding LLC belongs to Seymur Talibov, the son of the chairman of the Supreme Majlis of NAR, Vasif Talibov. This information, published in the media is not refuted by the Talibovs.

The group of companies Negsicahan Holding includes Badamli Mineral Sulari, Kafe Genclik, NP-1, NP-2, NP-3, Negsicahan, Hotel Grand Nakhchivan, LLC Carbon Qazi Zavodu, and LLC Ticaret Merkezi. The group also owns the regional cellular operator Nakhtel, Tebriz, Avtovagzal and Duzdag hotels, restaurants and recreation centers Kafe Bazargol, Agbulag, Panorama, Milli Yemekler Restorani, Batabat, and etc. 08D

Expert: No Local Food Products in Market

Since recently, every trip to the store for food has turned for an average Azerbaijani into a real test for strength. If earlier it was possible to plan your budget and calculate the approximate costs, now the prices that are increasing almost every day make you refuse of the purchase.

After the devaluation, the authorities attributed the general increase in prices to the fact that food products are purchased abroad in dollars, hence the price increase. However, according to them, the prices for local products should remain unchanged. Practice has shown the opposite - the dollar price for almost a year, with the exception of minor fluctuations, remains unchanged, and prices for both imported and local food products, be it tea, pickles, vegetable oil or butter, or meat, grow every day. The new prices at former salaries became an inordinate test for many families who migrated from the middle-to-poor level to the poor, and some even stepped beyond the poverty line. Why do prices continue to grow, and will this end?

According to the economist Natig Jafarli, raw materials for a significant part of the food products produced under the guise of local production are imported from abroad: "The food products are called local, but we are talking only about local packaging. One of the most popular so-called local products in the market is tea. In the shops dozens of types of this product are sold under various names, but everyone knows there are not so many tea bushes in Azerbaijan. That is, the volume of tea produced in Azerbaijan is quite small. Azerbaijan only packs tons of tea imported from Sri Lanka and India and sells it under various names as a local product. The growth of the US dollar in recent years has had a serious impact on logistics costs and the purchase of raw materials, and this in turn strikes the prices for so-called local products."

Jafarli stressed the volume of imports of raw materials from the EUR zone has increased.

"The second most popular so-called local product is milk and dairy products. However, the milk powder from which dairy products are made is imported from the EUR zone, which also affects the price increase," he said.

The expert also touched upon the growth of prices for agricultural products. In his opinion, the export of agricultural products, mainly to Russia, in the absence of production growth has led to a reduction in volumes in the local market.

"It affects the prices and leads to their growth. I think that from the beginning of December this year there will be a more serious price increase, since the change of the season will show itself. With the approach of winter new local agricultural products will not appear," the expert said.

The economist noted that both natural and artificial causes interfere with the production of raw materials in Azerbaijan itself.

"The land fund of the country is small. 20% of the lands are occupied and Azerbaijan is deprived of the opportunity to conduct any work there. Approximately 30-35% of the soil suitable for sowing is saline, which makes it unfit. These are natural causes. In addition, since Azerbaijan gained its independence until now, corruption, monopoly, attempts of the state to take the leading place in all areas, distrust of business, etc. prevent the development of production, and solutions to these problems have not yet been seen. In addition, we have little new technology, and our science develops poorly. For the production of raw materials, it is necessary to have a serious industrial, technological and scientific basis. Unfortunately, this is not observed in Azerbaijan," Jafarli summed up.

The agriculture expert Vahid Maharramov believes there are several reasons for the constant increase in prices for local products.

"The means used in the production of local products, that is, technology, equipment, and fertilizers are imported from abroad. Unfortunately, all means of production cost Azerbaijan dearly. If a few years ago they were cheap, then after the fall of the AZN exchange rate, the price of the means of production imported to the country doubled. This gradually exerts its influence on the growth of prices for local food products. In addition, the increase in prices for gasoline has affected the cost of food products. This also happened in stages. In addition, production in Azerbaijan has decreased. There are several reasons for this, the main one being the wrong policy of the authorities in the field of cotton growing. This area is now receiving more attention, and this has led to a slowdown in food production. Crop areas were given for cotton growing, and this reduced the volume of feed production, which affected the price of meat and dairy products. This year, the production of grain has decreased. Despite the fact that according to official statistics the decline is shown at the level of 150 thousand tons, our calculations show a figure of 400 thousand tons. This in turn has led to higher prices for livestock products and eggs," he said.

According to the expert, the growth in cotton production has reduced the sowing area of ​​vegetables.

"This led to a decrease in the volume of production of vegetable products. Compared with previous years, vegetable stocks for winter have decreased in the barns this year. It also raises the price of food," he said.

Maharramov noted that the principle of a chain reaction works, when an increase in prices for these products forces producers of other products to also raise prices.

"After all, they are consumers of more expensive food products and all this is an interrelated process, leading to a general rise in price. Increasing prices even for industrial products will lead to higher prices for agricultural products, because farmers have to raise prices for their products to compensate for their expenses,," he said.

The reasons for this, according to the expert, lie in the absence of sustainable production. "If the country had a normal production, the prices would not grow so dramatically. Until the country"s production is adjusted, prices will continue to grow," Maharramov added. -0----

Company Selected for Engineering and Geological Work in Hajigabul Industrial District

Baku / 01.11.17 / Turan: Azerbaijan Investment Company (AIC) has signed a contract with Geo-Qazma LLC for engineering and geological research in the Hajigabul industrial district, Fuad Maharramov, Deputy Executive Director of AIC, said.

To create a new industrial quarter in Hajigabul district, 20 hectares have been allotted. The government transferred these lands from agricultural to industrial. The tender procedure for engineering and geological research was held on October 20, and the contract was signed on October 24. The amount of the contract is not disclosed. In any case, its size is not more than 50 thousand manat.

Geo-Qazma LLC was established in January 2016 with the capital of 10 manat. The company"s activities are not publicly known.

The Hajigabul industrial district (ID) was established to support small and medium-sized businesses in the non-oil industry. To create the conditions for the ID operation, the Ministry of Economy was allocated 4 million manat from the state budget of 2017.

The decree of the President of Azerbaijan on the establishment of the Hajigabul ID was signed in July this year. The Neftchala and Masalli industrial districts also operate. ---- 08D

Over 80% of Concessional Loans Finance 2% of Projects

Baku / 01.11.17 / Turan: The National Entrepreneurship Support Fund (NESF) provided 1,270 soft loans through authorized banks for a total of 96.5 million manat in January-September 2017. For the third quarter, the Fund allocated over AZN 33.3 million to over 600 entrepreneurs.

According to the NESF, this year 25 major projects have been financed (the need for soft loans is up to 10 million manat). The companies received 78.5 million manat of loans for these projects. This amounts to 81.3% of the total volume of the Fund"s loans this year.

For nine months, the NESF financed 36 projects for industrial production in the amount of 30.8 million manat and 5 projects for processing agricultural products for the amount of 2.5 million manat. Over 3.3 million manat of loans have been allocated for financing five tourism projects. The bulk of loans (1,221 projects, 58.6 million manat) is aimed at the production of agricultural products.

The NESF has twice conducted a tender to select an auditor of the financial statements for the coming year. However, each time the number of participants did not reach the required level - at least 3 applicants. -----08D

Access Bank Completed Third Quarter with Loss Exceeding AZN 48 Million

Baku / 01.11.17 / Turan: Access Bank"s assets in the third quarter of 2017 decreased by 202 million 087 thousand manat or 19.2% compared to the same period of the previous year, amounting to 852 million 001 thousand manat.

During the reporting period, the bank"s liabilities decreased by 196 million 415 thousand manat or 20.2% and amounted to 773 million 644 thousand manat.

The deposits reached 376 million 792 thousand manat (an increase of 107 million 615 thousand manat or 40%).

The debt of Access Bank to the Central Bank of Azerbaijan for this period declined from 30 million manat to 10 million manat.

Deposits from banks and other financial organizations for the year decreased from 73 million 091 thousand manat to 36 million 868 thousand manat, and loans from other financial institutions decreased from 503 million 284 thousand manat to 269 million 755 thousand manat.

The bank"s capital decreased by 5 million 672 thousand manat or 6.8%, amounting to 78 million 357 thousand manat.

Access Bank completed the first three quarters of the year with a loss of 48 million 298 thousand manat. -71D-

Validity Period of Last Paper Policies on Compulsory Motor Third Party Liability Insurance Expired

Baku / 01.11.17 / Turan: On October 31, the insurance coverage period for compulsory motor third party liability insurance (MTPL) concluded on paper earlier (until 23:59, October 31, 2016) was over.

Thus, the MTPL policies, written out on paper forms, are completely excluded from circulation.

It should be noted that from November 1, 2016 in Azerbaijan, compulsory MTPL insurance contracts are concluded solely in the form of an electronic document. -71D-

Finance Ministry Places State Bonds of Three-Year Turnover Period

Baku / 01.11.17 / Turan: The Finance Ministry placed state bonds with a three-year turnover term (state medium-term bonds, SMTB) on October 31. All the auctioned securities were sold.

At the auction, the bonds were sold to investors for the amount of AZN 20 million, the average weighted yield on which was 10.17% per annum. In terms of applications, the yield reached 12.9%. The Finance Ministry forecasted a yield of 15% per annum for these SMTB. At the auction, the demand for them exceeded the supply by AZN 39 million.

Earlier, the Finance Ministry brought securities with a circulation period of 91, 182 and 364 days, and 2 years for the auctions. Rates on the yield of three-year bonds may also indicate the government"s expectations of inflation in the coming years.

This year, the Finance Ministry issued medium-term bonds worth AZN 100 million to cover the state budget deficit. In general, the total volume of the issue of bonds is 700 million manat. In 2018, the government intends to issue government bonds in the same volume. ----- 08D

Foreign currencies rates fixed by Central Bank

1 ABŞ dollarıUSD1.7003
1 AvroEUR1.9776
1 Avstraliya dollarıAUD1.3023
1 Argentina pesosuARS0.0964
1 Belarus rubluBYN0.8613
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100 Çili pesosuCLP0.2672
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