Azerbaijan-EU Investment Cooperation Targets Green Project

(MENAFN- AzerNews)

Nigar Hasanova Read more

Azerbaijan joined the EBRD on September 25, 1992, after the country regained its independence. Besides, the bank helps Azerbaijan diversify its Economy by supporting the development of the private sector in non-oil sectors and strengthening the governance of private and state-owned companies. Further expanding access to finance for local businesses by encouraging lending by banks and non-bank financial institutions as well as by helping develop local currency and capital markets, EBRD also supports the country in developing its green economy.

Thus, the bank has implemented 177 projects in Azerbaijan, with investments totaling €3.108 billion.

As a result of this investment, the State Oil Fund of the Republic of Azerbaijan (SOFAZ) has committed €100 million to the EBRD's Equity Participation Fund (EPF). The initial size of the EPF is €350 million.

This year, the European Bank for Reconstruction and Development (EBRD) and Azerbaijan examined the prospect of boosting renewable energy cooperation. Azerbaijan's Minister of Economy, Mikayil Jabbarov, shared information about this on the "X" social network.

"Within the framework of our visit to Great Britain, we met with the first vice president of the EBRD, Jurgen Rigterink. Our discussions included the perspective priorities of bilateral cooperation in the fields of renewable energy sources (BEM), the private sector, and information technologies. We considered the possibilities of expanding the activities of the EBRD in Azerbaijan," the minister said in the tweet.

With this possible cooperation in the sphere of renewable energy, Azerbaijan not only contributes to the economy but also develops it in a sustainable manner. Besides, Azerbaijan decided to double the volume of gas it exports to Europe to 20 billion cubic metres a year through signing a new Memorandum of Understanding on a Strategic Partnership in the Field of Energy. Recall that, during the event in 2022, Commission President Ursula von der Leyen and Commissioner for Energy Kadri Simson met with President Ilham Aliyev and Azeri Energy Minister Parviz Shahbazov to strengthen the existing cooperation between the EU and Azerbaijan.

“Today, with this new Memorandum of Understanding, we are opening a new chapter in our energy cooperation with Azerbaijan, a key partner in our efforts to move away from Russian fossil fuels. Not only are we looking to strengthen our existing partnership, which guarantees stable and reliable gas supplies to the EU via the Southern Gas Corridor, but we are also laying the foundations of a long-term partnership on energy efficiency and clean energy as we both pursue the objectives of the Paris Agreement. But energy is only one of the areas where we can enhance our cooperation with Azerbaijan, and I look forward to tapping the full potential of our relationship,” this was told by the Commission President, Ursula von der Leyen.

It should be noted that, as stated in the President's comments, Azerbaijan's collaboration with the EU is not limited to only the energy sector for investment. This year, the European Bank for Reconstruction and Development (EBRD) has allocated a loan of 60 million USD to "Azerbaijan Caspian Sea Shipping" CJSC (ASCO).

Additionally, Azerbaijan is a member of the European Neighbourhood's Eastern Partnership (EaP), and increasing the country's economic resilience is critical for the EU. The expansion in the number of small and medium-sized firms (SMEs) has a substantial impact on a country's economic resilience. According to a European Commission report published in 2023 as part of the EU4Business initiative, between 2009 and 2017, the EU contributed 14 million euros, supported 11,300 businesses, and created 3 thousand new jobs, effectively increasing exports, expanding trade opportunities, and assisting businesses in growing. Only in 2021, the EU4Business initiative supported almost 13 thousand SMEs in Azerbaijan, generating 63 million euros in revenue and creating an additional 2 thousand jobs. The difference in the time-to-output ratio demonstrates the EU's growing interest in assisting SMEs and in creating new jobs in Azerbaijan.

In terms of potential investment opportunities, a high-level working group on the EU's Economic Investment Plan was launched jointly by the European Union and Azerbaijan. In the spirit of Team Europe, the new coordination body will steer and identify priority investments to be delivered with EU support in collaboration with the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD), and the EU Member States' development finance institutions. This will contribute to maximising the potential of Azerbaijan's Economic and Investment Plan, which aims to mobilise up to EUR 2 billion in investments in the nation through new financial instruments such as blending and guarantee. Such key investments would help the government diversify the Azerbaijani economy, provide quality jobs throughout the country, and encourage inclusive rural development.

In a nutshell, EBRD is pleased to have a close partnership with Azerbaijan through the launch of the high-level working group on the economic and investment plan.

“The launch of the high-level working group on the Economic and Investment Plan is another clear sign of our close partnership with Azerbaijan. The Economic and Investment Plan is already delivering tangible benefits for the people of Azerbaijan, with almost EUR 90 million being committed and a significant pipeline of investment projects being built. This includes investments towards upgrading street lighting in Ganja and supporting access to finance for small businesses across the country. With the launch of our joint working group, we can ensure that Azerbaijan and its people will benefit even more from the investment potential provided by the Economic Investment Plan." The European Commission's Director for Neighbourhood East and Institution Building, Lawrence Meredith, said.

In conclusion, the current policy and present circumstances, such as rising energy consumption, emphasise the necessity for the EU to address multidimensional energy concerns of the union, such as security, diversification, and supply sustainability. In this context, the EU has financed a number of projects aimed at diversifying the region's sources of revenue. Due to its geographical location as a producer, the continent seeks to collaborate with Azerbaijan, boosting relations through the European Neighbourhood Policy and the Eastern Partnership Program. Azerbaijan, on the other hand, professes a willingness to engage in political and economic cooperation with the EU in order to get access to the global market and be acknowledged as a regional force.

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