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BAKU, Azerbaijan, January 20. The European Bank
for Reconstruction and Development (EBRD) is quite optimistic about
future cooperation with Azerbaijan, be it in green finance,
economic inclusion, sustainable infrastructure, or digitalization,
Matteo Patrone, Managing Director, Eastern Europe and the Caucasus
(EEC) at the EBRD, told Trend in an exclusive interview.
“As you might already know, our current strategy focuses on
helping diversify Azerbaijan’s economy; further expanding access to
finance for local businesses, and supporting the country’s green
economy. Our strategy is set for review in 2024, and throughout our
continuous engagement with authorities, clients and partners, we
acquire important elements that will be helpful for the preparation
of the new strategy,” he said.
According to the managing director, the cooperation with
Azerbaijan in 2022 provides a very strong steppingstone for the
future partnership. It was a year of green projects in sustainable
infrastructure, renewable energy, but also in the corporate
sector.
“We signed two green city agreements in Ganja, to support the
city in solid waste management, but also to make it more energy
efficient through our street lighting project. We thank the EU for
the strong partnership in this and other projects. We co-financed
the first large scale solar power plant in Garadagh to support
Azerbaijan’s decarbonization agenda. In the corporate sector, we
financed a construction of an energy efficient cold storage in Alat
Bay and the green expansion of an agricultural producer in Salyan
city. We carried this momentum through to 2023, and on Thursday, we
financed our first circular economy project in Azerbaijan – the
expansion of a battery recycling company in Sumgayit,” he said.
Recently, the EBRD has also launched IT Hubs in Azerbaijan,
where the Bank is supporting the training of students in the
regions for with future employment opportunities with international
ICT companies, boosting the regional development and supporting the
youth there. For Azerbaijan, this is the first project to be funded
through a bilateral donor agreement between the EBRD and the
Government.
Further speaking, the managing director noted the successful
partnership between the EBRD, Aztelecom and Azerbaijani government
on financing the development of digital infrastructure in the
regions of Azerbaijan.
According to Patrone, this was done together with the partners
from the European Union who supported the loan of up to $50 million
by a guarantee through the European Fund for Sustainable
Development (EFSD).
“At the EBRD, we believe that investing in digitalization means
investing in the future. Reliable access to broadband services will
bring tangible benefits to more than 280,000 households in the
regions of Azerbaijan,” he said, noting that, “by bridging the
digital divide between the capital and rural areas, the project
will also benefit local businesses by making them, and their
existing or potential workforce, more competitive, boosting
Azerbaijan’s broader economy in a more inclusive way”.
“I am also happy that the EU is set to provide a grant of 1
million euros to the Ministry of Digital Development and Transport
to improve competition and regulation in Azerbaijan’s
telecommunications sectors, as well as to strengthen the borrowers’
corporate governance,” he said.
The managing director also highlighted the support the Bank
provides for Azerbaijan’s decarbonization agenda at both investment
and policy levels. In this regard, last year has been a historic
one for the EBRD-Azerbaijan cooperation.
“Notably, we invested in the construction of the first privately
owned, utility-scale solar power plant in Garadagh. We are also
interested in financing the construction of a wind power plant in
the Absheron peninsula. All this, of course builds on a multiyear
technical assistance work provided to the Ministry of Energy. Among
other things, we have supported the introduction of a the
legislative framework for renewable energy, the setting up of the
energy regulator, and helped the ministry conduct a grid
strengthening study, which we hope will be conducive to invest in
grid improvements across Azerbaijan,” he said.
More recently, the EBRD signed a MoU with the Ministry of
Energy. Once the current engagements will be brought to fruition,
the Bank will continue supporting the development of low carbon and
climate resilient power sector in Azerbaijan, in line with the
country’s commitments under the Paris Agreement.
“This may include further development of renewable energy,
development of sectoral low carbon pathway for the power sector,
grid enhancement, improved energy efficiency, methane emissions
reduction and gradual introduction of innovative technologies,
including hydrogen,” Patrone explained.
The EBRD also stands ready to support Azerbaijan in the
expansion, upgrade and digitalization of Azerbaijan’s energy grid
to assist the country in transporting green energy to Europe.
“We very much support bringing the Caucasus closer to the
European Union, be it in renewable energy, transport
infrastructure, or policy reform. As I mentioned earlier,
Azerbaijan has a great potential when it comes to the development
of renewables. As for different routes for transportation, we will
have to look at them on project-by-project basis. This can only be
done in case there is a relevant proposal to our Bank. Recently we
saw that President Aliyev, together with leaders of Romania,
Georgia, Hungary, and the President of the European Commission von
der Leyen signed a memorandum of understanding for the development
of the Black Sea Energy submarine cable,” he said.
The EBRD appreciates that stronger electricity interconnection
between the region and the EU will help reinforce European energy
security, while transforming the Caucasus into a well-integrated
electricity hub within in the EU internal market, he pointed
out.
“Such projects hold many promises, and in case of the Black Sea
Energy submarine cable, we are very much looking forward to the
results of the currently ongoing feasibility study. In case of
Azerbaijan-Turkey-Europe cable, we still need to hear more details
from the parties involved,” the managing director explained.
At the same time, the EBRD welcomes Azerbaijan’s recent gas
agreement with the EU, which aims to increase gas exports to
Europe.
“In the past, the EBRD supported the construction of the TANAP
and TAP pipelines, so we have a great record of accomplishment with
your government and the Southern Gas Corridor. Currently the market
study for this project is in progress, and shall the decision to
expand be made, we will be glad to engage with Azerbaijan and
international partners to consider financing in line with our
requirements for gas projects. For the Bank, the project would have
to be in line with the goals of the Paris Agreement and the Bank’s
Fossil Fuel approach,” he said.
Meanwhile, the EBRD has started formal discussions with the
Azerbaijan Caspian Shipping Company (ASCO) on expanding the marine
fleet in the Caspian.
“We are conducting the due diligence, and negotiations are
progressing. While it is still a bit premature to state the exact
figure for this project, we aim to sign the relevant agreements
before summer. ASCO, as Aztelecom, is a state owned company. EBRD
is very well placed to support commercialization efforts by state
owned companies, and we look forward to expanding this agenda in
Azerbaijan,” he noted.
At the same time, the EBRD is conducting an active and fruitful
on-going dialogue with the Central Bank to further strengthen the
resilience of Azerbaijan’s banking sector and looks forward to
continuing the partnership.
“This week, we met with the Governor of the Central Bank and
discussed current trends in the economy and the banking sector.
Among other things, we also touched upon the financing of small and
medium-sized enterprises (SME) in the sector and we plan to
cooperate with the Central Bank in assessing several practical
tools to improve access to finance in the country. We also
discussed our cooperation on the Environmental, Social, and
Governance (ESG) front and are ready to assist the Central Bank by
providing advice and training,” he said.
Further speaking, the managing director noted that the EBRD
remains committed to financing the Azerbaijan banks, particularly
mid-sized private ones in need of support.
“As we speak, we are working on several facilities in line with
our main strategic topics such as promotion of international trade,
support to MSMEs, and green and inclusive financing. Our engagement
does not stop at the financing alone and includes other important
areas such as strengthening internal capacity of our partners,” he
noted.
“So we are quite optimistic about our future cooperation with
Azerbaijan, be it in green finance, economic inclusion, sustainable
infrastructure, or digitalization. We will take all the above
milestones into consideration while preparing our next country
strategy for 2024-2029,” Patrone concluded.
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