Business

First pipe for BTC construction arrives in Baku
BP said that the first joints of pipe for the construction of the Baku-Tbilisi-Ceyhan Main Export Pipeline were delivered to Baku from the Georgian Black Sea port of Poti on January 22. The first shipment of 240 joints of pipe was brought by railway from Poti by the German company KUHNE & NAGLE, which is a freight-forwarding subcontractor for the Azerbaijan section of the pipeline.
This first shipment of the pipe was brought to Poti on the 14th of January by the M.V. Caledonia, a ship owned by Bertling, the British freight transportation company. The 42" diameter pipe was produced by the Japanese Sumitomo Corporation. The coating was carried out in Malaysia.
The pipe joints will be stored in the Umbaki pipe yard near Sangachal from where they will be transferred to the Right of Way in early spring of this year when physical construction activities are planned to commence.
Approximately 39,000 joints of pipe will be needed for the Azerbaijan section of BTC which is 460 kilometers long. Transportation of pipe shipments will take about seven months. Each ship carries 25-30 km of pipe.
Michael Townshend, BTC Co Chief Executive Officer, says, "The arrival of the first joints of pipe in Baku is a major step toward commencement of the physical construction works of this major regional export pipeline. The work is progressing on schedule and this will allow for laying the first pipe into the ground in time."
The BTC Co. shareholders are:  BP (30.1%); SOCAR (25.00%); Unocal (8.90%); Statoil (8.71%); TPAO (6.53%); Eni (5.00%); TotalFinaElf (5.00%), Itochu (3.40%); INPEX (2.50%), ConocoPhillips(2.50%) and Amerada Hess (2.36%).
First oil from the Azari Development Project of the Azari-Ciraq-Gunasli oil field is due to be received early 2005.

IBA upbeat at year-end results
Assets of the International Bank of Azerbaijan (IBA) are valued at AZM2,450bn and the credit portfolio amounts to AZM1,200bn, according to the 2002 outcomes. The 2002 balance profits have made up AZM232.8bn against the 2001 indicator of AZM180bn. The bank's net profit has increased to AZM24.1bn by 52 per cent compared to the 2001 figure. This indicator is planned to rise by three per cent in 2003, the IBA press service has told AssA-Irada. The bank’s deposit portfolio has totaled AZM1111,3bn last year, which constitutes more than half of the overall deposits placed in the country. 399.2bn of the savings has been deposited by physical persons. Depositors have gained dividends of AZM46.5bn.
Expansion
The International Bank of Azerbaijan has undertaken steps to expand its activity, opening office in London and preparing to launch another branch in Russia. Its official representation office in London was inaugurated on January 23. The ceremony was held at the Bank of England building at the latter’s initiative. The representation office was registered in England on December 23, 2003. IBA’s branch in Saint-Petersburg, Russia is expected to open this year, as its inauguration will be dedicated to the 300th jubilee of the city. Last year, IBA set up its branch in Moscow.
More loans
The Black Sea Trade and Development Bank (BSTDB) and the European Bank for Reconstruction and Development (EBRD) have increased loans to the International Bank of Azerbaijan in 2002, reaching $6.5m and $5m accordingly. The rise in BSTDB loans constitutes US$4m, while the figure for the EBRD accounts for US$2.5m. Meanwhile, the Iranian Export Development Bank offered $50m loan to IBA. Of this sum, $5m is envisaged as a short-term loan, while $45m - long-term. The IBA has already studied the proposal and agreed to start talks in February.

BUSBank 2002 net profit accounts for AZM7.3bn
The BUSBank board chairman, Zakir Zeynalov told a news conference at the New Azerbaijan Party's office on Friday that his bank had made AZM21bn in net profit since its two and a half years of operation. The sum approximately amounts to the charter capital of the bank.
The state-owned bank’s incomes have constituted AZM34.9bn in 2002, while its expenditures made up AZM27.6bn. Thus, AZM7.3bn of net profit has been transferred to the state budget last year. Zakir Zeynalov said his bank, which is working with a limited license, intends to expand its activities in the securities market. It has placed AZM65bn in this market last year. The placed funds have constituted 23 per cent of the bank's incomes. The BUSBank is planning to hike its incomes at the account of plastic card operations.
The board chairman indicated that promotion activity would be enhanced to increase profits from lottery bonds as there were problems over the sales of the bonds.
As for the BUSBank privatization, he said the decision would be made in 2004.
Strategic plan
The BUSBank needs AZM20bn to implement the 2003-2005 strategic plan, the bank's board chairman said. This fund will be utilized to update information technologies of the bank.
The $1.5m-loan provided to the BUSBank by the World Bank within the technical assistance program, will be spent on institutional development and structural reforms, according to Zakir Zeynalov.
License to issue credits
The BUSBank will be licensed to issue loans starting in June.  The bank said it will make no preferences as to allocating loans.
Preparations for the bank’s privatization is underway in accordance with the schedule submitted by the international financial institutions. Steps are being undertaken to reconstruct its accountancy and information technology systems and step up the control mechanism. The privatization of the BUSBank will start late 2004 - early 2005.
Lottery bonds business
The Ministry of Finance is planning to sell 20,000- and 40,000-manat lottery bonds totaling AZM10bn.  The BUSBank will be in charge of sales of these bonds. The bank has told AssA-Irada that only AZM5.7bn of the bonds was sold against the planned AZM20bn in 2002. This is attributed to the small stake of the lottery bonds in their total volume. The BUSBank has offered suggestions to the Ministry of Finance to recover the situation.

AzAL to be privatized in two stages
The Ministry of Economic Development said it had prepaid all the documentation needed for the privatization of Azerbaijani State Airlines Concern AzAL. The whole process will be conducted in two stages, as joint ventures are to be privatized first with other enterprises to follow them. Currently, there are three joint ventures within AzAL, which include state shares of 50 per cent each.
Advisor
The consortium of companies, including Emerging Markets Corporation, Baker & McKenzie and Ernst & Young has recently won a bidding held by the Ministry of Economic Development to find a consultancy firm for the privatization of AzAL enterprises.
The winner of the bidding will assist in attracting the potential investors in the privatization and preparing sale-purchase agreements.
Currently, an agreement on consulting services is being prepared to be concluded between the Ministry and the consortium.

Turkish Enka to present steam-gas unit project
Turkey's Enka Company is planning to present shortly a project on the construction of a steam-gas unit in Sumgayit at a meeting of the scientific-technical council of Azarenerji.
In a meeting with Azerbaijani President Heydar Aliyev late 2002, the honorary head of Enka, Tarik Shara, said the company was intending to reconstruct a 400-mWt thermal power station in Sumgayit.
Azarenerji are holding talks with international financial institutions and companies to construct a 400-500-mWt power plant on the basis of the Sumgayit 1 and 2 thermal power plants, which have been suspended earlier this year because of unprofitability. The Swedish Alstom, Japanese Mitsui, German Siemens and Austrian VATECH HUDRO companies have already presented feasibility study of the new power plant to be built.
The implementation of this important project is expected to commence in summer or fall.

Azeri delegation for Europe
The OSCE Office in Baku is conducting a three-day study tour over January 27-29 of industrial parks and development schemes for small and medium-sized enterprises in Austria. Organized in conjunction with the Azerbaijani government and the UNDP, the tour is attended by the representatives of the Azeri Ministry of Economic Development, the Cabinet of Ministers, the UNDP office in Azerbaijan and several small-business interest groups. The trip, which is aimed at providing invaluable exposure and knowledge of existing schemes and industrial parks in Central Europe, supports the goals of Azerbaijan's National Poverty Reduction Strategy for 2002-2005 to create business incubators in order to stimulate growth of SMEs in the country. Participants held meetings with the Vienna-based UN Industrial Development Organization, visited the nearby Eco Plus Business Park and the Gyor Business Park across the border in Hungary, according to the OSCE office in Baku.

Law to protect foreign trade interests
The Ministry of Economic Development has prepared a draft law on the protection of interests of the Azerbaijani Republic in the foreign trade. The draft law aims to maintain interests of the country in export and import operations, to integrate the national economy into the global system, to safeguard national businesses against the negative impacts of foreign competition.  In addition, the document in question deals with general principles of special protection and antidumping measures in the foreign trade sphere, maintaining the payment balance of the country, etc. The draft law has been submitted to interested bodies for consideration, according to the Ministry.

US company to be involved in energy system reconstruction
The US-based Burns & Roe Enterprises Inc. that specializes in the energy sector has won a tender held by the European Bank of Reconstruction and Development (EBRD) seeking consultancy for examining the situation with the energy system of Azerbaijan. Azarenerji, the EBRD and the Azerbaijani government have agreed on the allocation of $50-60m for modernizing energy facilities and carrying out actions aimed at lowered electricity losses by raising the efficiency of power distributing systems.
The company's mission has completed its visit to Azerbaijan. The head of the mission, Denis Shicar, has said they will define necessary steps to  improve the energy supplies to consumers and raise effectiveness of the energy system in Azerbaijan.
The EBRD loan is not sufficient to fully conduct restoration works, according to Denis Shicar. That is why the company will concentrate its work on thermal power plants, in particular increasing the project capacity of eight units of the Mingacevir state power plant. The final report will be submitted to the EBRD in May.