(MENAFN- Trend News Agency) BAKU, Azerbaijan, June 3. The European bank forReconstruction and Development (EBRD) stands ready to collaborateclosely with Azerbaijan to ensure COP29 is a successful andimpactful event, advancing our shared goals of sustainability andclimate action, Alkis Vryenios Drakinos, Director, Regional Head ofthe Caucasus for the EBRD, told Trend in an exclusive interview.
"Our team in Baku, but also those spread across our differentcountries will be supporting Azerbaijan in leveraging theopportunity presented by the conference to mobilize green financeon a national, regional, and global scale," he said.
Drakinos pointed out that Azerbaijan's role in advancing climateaction and sustainability goals is becoming increasinglysignificant.
"The country has taken a pole position in the Caucasus when itcomes to deploying utility-scale solar and wind energy generationcapacity, and the EBRD has been instrumental in facilitating this the largest institutional investor in Azerbaijan, and theclimate finance leader in the region, we are a natural partner forAzerbaijan's ambitious decarbonization agenda," the officialnoted.
The EBRD rep reminded that the bank recently financed the firstutility-scale privately owned wind power plant in the Absheron andKhizi regions, following investment in the first utility-scalesolar power plant in Garadagh last year.
"We're also enhancing energy efficiency in Ganja under ourflagship Green Cities program. On the policy front, ourcollaboration on renewable energy auctions has led to the planneddevelopment of a solar power plant project in Garadagh. We now wantto help carry this momentum forward and we believe that COP29 is agreat opportunity," Drakinos said.
EBRD's role in renewable energy auctions launch inAzerbaijan
He further noted that the EBRD has been supporting Azerbaijan'sMinistry of Energy in developing a robust legal and regulatoryframework to ensure the success of the renewable energy auctionslaunch.
"We support auctions because, through competition andtransparent procedures, beneficiary countries get the best possibleprices from international quality bidders. To ensure the successand effectiveness of these auctions, the EBRD has been supportingthe Ministry of Energy in developing a robust legal and regulatoryframework. This includes contributions to the new Renewable EnergyLaw, which provides the necessary foundation for competitivebidding processes. Our experience in supporting similar auctions incountries like Uzbekistan, Albania, and Serbia has shown that suchframeworks are very successful in mobilizing private sectorfinancing and high-quality project delivery," he said.
According to Drakinos, the launch of the first renewable energyauction for a solar power plant in Garadagh represents asignificant milestone in the country's journey towardsdecarbonization and sustainable energy development, "a game-changerfor Azerbaijan's green energy agenda".
"The primary objective of these auctions is to attract privateinvestment in utility-scale renewable energy projects, increasingthe renewable energy share of Azerbaijan's installed electricitygeneration capacity. By helping foster a competitive andtransparent procurement process, we aim to help ensure that thebest projects are selected, driving both innovation and efficiencyin the sector," he elaborated.
The EBRD official also spoke about the outcomes of suchauctions. "They are designed to diversify Azerbaijan's energy mix,reducing reliance on fossil fuels, and helping the country meet itsinternational climate commitments. This is particularly relevantnow as the country prepares to host the COP29 climate conference inBaku later this year. Investments in renewables will also stimulateeconomic growth and diversification by creating jobs andencouraging technological advancements within the energy sector. Weremain dedicated to supporting Azerbaijan's renewable energyambitions and look forward to continuing our collaboration in thistransformative journey".
Promoting connectivity through the MiddleCorridor
Further speaking, Alkis Drakinos highlighted the bank's supportprovided for the development of the Trans-Caspian InternationalTransport Route (TITR), or the so-called Middle Corridor. As such,the bank may consider supporting additional projects along theroute.
"Being a demand-driven institution, the EBRD will considersupporting additional projects along the Middle Corridor providedthese projects are bankable and meet our required governance,transparency, environmental, and procurement standards. Eligibleprojects in support of this project addressing either transit,trade, and energy potential or infrastructure gaps in the samesectors may be forwarded to the EBRD for consideration by any amongthe three South Caucasus countries as well as from Central Asia,"he said.
According to Drakinos, over the years, the EBRD has beensupporting projects promoting connectivity among all its 38countries of operations. "Connectivity is in fact a priority themein most of our Country Strategies. I personally align myself withthose that see connectivity as a key driver for economic growth andprosperity as well as a means of increasing the understanding andcooperation among countries and peoples," he said, adding that theSouth Caucasus plays particularly important role in thisprocess.
"I am fully aware of the strategic importance of the SouthCaucasus region in increasing substantially international tradeacross sectors including renewable energy, playing a catalytic roleas a bridge connecting Asia with Europe as well as within the SouthCaucasus region countries. More particularly, Azerbaijan'sgeographical location, infrastructure networks, economicresilience, natural resources wealth, and renewables potential,position the country in the epicenter of the Middle Corridor,"Drakinos pointed out.
The EBRD rep further added that, to date, the bank has supportedAzerbaijan's transit potential along the Middle Corridor by signinga financial package of 38.7 million euros for ASCO shippingcompany, to finance the acquisition of two vessels that will benavigating through the Black Sea trading food commodities fromSouth America towards Central Asia through Georgia's ports in theBack Sea, and then via trucks or trains to the port of Bakucrossing the Caspian until their final destination.
Considering future Southern Gas Corridorfinancing
Discussing the potential financing for the future expansion ofthe Southern Gas Corridor (SGC), Drakinos mentioned that the bankmight consider participating in the initiative.
"Azerbaijan has been a long-standing partner of the EBRD forthree decades. In the past, the EBRD supported the SGC throughfinancing its key components. We understand that the capacity ofthe SGC is expandable, and should a decision be made to pursue thisexpansion by the Azerbaijani authorities if approached, we couldconsider engaging with the project," he said.
The EBRD, as a transition bank, views climate mitigation andadaptation as essential transition processes, Drakinos noted."Given this perspective, we acknowledge the challenges faced byhard-to-abate sectors in our countries. Therefore, we recognize alimited scope for fossil fuel investments, only if they canaccelerate decarbonization".
He pointed out that to finance the project, it must align withthe goals of the Paris Agreement and the bank's stance on fossilfuels. "This includes strict adherence to criteria designed tomitigate the risk of carbon lock-in and promote low-carbon gastransportation. Potentially, any future cooperation on the SGCwould perhaps need to demonstrate the capacity to transportlow-carbon gases and ensure future-proofing of the infrastructureto accommodate these requirements," Drakinos explained.
"The EBRD is committed to ensuring that any investments wesupport contribute to a sustainable and low-carbon future. Thismeans that projects like the expansion of the SGC must not onlymeet current energy needs but also be aligned with future demandsfor cleaner energy. By integrating these principles, we aim tosupport Azerbaijan in its efforts to achieve a swift and resilientenergy transition," the official added.
EBRD's new Country Strategy forAzerbaijan
Supporting Azerbaijan's future economic diversification throughstrengthening sectors outside oil and gas and fossil fuels remainsone of the foremost priorities for the EBRD, Drakinos pointedout.
"To date the EBRD has supported Azerbaijan's economicdevelopment by investing in 190 projects of 3.8 billion euros invalue. Most of this funding has been oriented towards Azerbaijan'ssustainable infrastructure including in the energy sector. Ouryearly level of investments has been varying in tandem with demandfor bankable projects from Azerbaijan's private sector and thestate sector," he said.
According to Drakinos, the bank is interested in boosting itsshare of private sector operations. "I can expect that in thecoming years, investments in support of private sector developmentincluding through our growing network of partner banks, the MiddleCorridor, and facing the global challenge of climate change mainlythrough power generation from renewable resources and subsequentimprovements on the national grid, will be at large our areas ofoperational focus".
"In all our operations we will continue supporting greentransition, inclusion, and digitalization in line with our ownpriorities and strategic direction as an institution. The aboveoperational directions will be outlined in our forthcoming CountryStrategy for Azerbaijan that will cover the period 2024 – 2029," henoted.
The EBRD rep also pointed out that the bank is in discussionswith the Azerbaijani authorities and the private sector about theCountry Strategy priority themes.
"We expect to complete the process and submit the CountryStrategy to our shareholders for their approval later in 2024," headded.
In conclusion, Drakinos added that the 30 year-long partnershipof EBRD with Azerbaijan is currently at a positive juncture steeredby frequent high-level meetings fostering a forward-looking andfurther improving cooperation on agreed strategic directions.
"For the mid- to long-term, our partnership with Azerbaijan willbe at large captured by our forthcoming Country Strategy forAzerbaijan 2024-2029. Priority themes in the Strategy will includefostering reform towards private sector development, improvedgovernance, and commercialisation of SOE policies, supportinginvestment and reform to address regional challenges such as thesuccess of the Middle Corridor as well as global challenges such asclimate change. In this context, immediate future cooperationalready includes support for the success of COP29 this comingNovember in Baku," Alkis Vryenios Drakinos concluded.
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