VZCZCXRO7593
RR RUEHLN RUEHVK RUEHYG
DE RUEHKB #1460/01 3440853
ZNR UUUUU ZZH
R 100853Z DEC 07
FM AMEMBASSY BAKU
TO RUEHC/SECSTATE WASHDC 4403
INFO RUCNCIS/CIS COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 2498
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUEHBS/USEU BRUSSELS

UNCLAS SECTION 01 OF 05 BAKU 001460 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EUR/CARC 
DEPT PASS TO TDA FOR STEIN, EXIM FOR GLAZER 
ANKARA FOR FCS 
COMMERCE FOR 4231 ITA/MAC/ORUE FOR DSTARKS 
COMMERCE FOR 3004 ITA/FCS/ ADVOCACY FOR ACHAMS-EDDINE 
 
E.O.  12958: N/A 
TAGS: ECON EINV ETRD ENRG EFIN AJ
SUBJECT: AZERBAIJAN COMMERCIAL UPDATE, NOVEMBER 15 - 30, 2007 
 
¶1. SUMMARY: This information is drawn primarily from the 
Azerbaijani local press, and has not been checked for accuracy.  The 
opinions and policies expressed in this report are those of the 
authors, not the U.S. Government.  END SUMMARY. 
 
- SOUTH-KOREAN ENERGY PROJECT 
- ADB HIGHWAY PROJECT 
- TRANSPORT INVESTMENTS USD 1 BILLION 
- AGRICULTURAL STATISTICS FOR JANUARY-OCTOBER 2007 
- FDI TOTALS USD 4.7 BILLION IN JAN-OCT 2007 
- CARGO TRANSIT FALLS 
- CONSULTANT FOR SECOND IPP 
- GOVERNMENT BUYS 10 PERCENT IN THE GARADAGH CEMENT PLANT 
- POWER PRODUCTION TO INCREASE IN AZERBAIJAN IN 2008 
- MILK-PRO'S NEW MILK FACTORY 
- CASPAR PROCUREMENT 
- CASPAR PLANS CASPIAN SHIPBUILDING FACTORY 
- HEALTH MINISTRY EOI FOR MEDICINE QUALITY CONTROL LABORATORY 
- TENDER FOR AN AUTOMATED OBSOLETE DOCUMENTS REGISTER 
- GEYCHAY TELECOMMUNICATION CENTRE TENDER 
- STATE BORDER SERVICE TENDER FOR CLOTHING 
- MINISTRY OF HEALTH TENDER FOR MEDICAMENTS AND PRODUCTS 
- MINISTRY OF HEALTH TO PURCHASE EQUIPMENT AND FURNITURE 
- MINISTRY OF HEALTH TENDER FOR MEDICAMENTS AND EQUIPMENT 
- ROAD REHABILITATION AND REPAIRS TENDER 
- MINISTRY OF HEALTH TENDER TO PURCHASE MEDICAMENTS 
- MINISTRY OF HEALTH TENDER TO PURCHASE DRUGS 
- REAL ESTATE REGISTER SERVICE TENDER FOR DIESEL GENERATORS 
- MINISTRY OF FINANCE TENDER FOR AIR VENTILATION SYSTEMS 
- ZAGATALA TENDER FOR RECONSTRUCTION OF STREETS 
- GEYCHAY TENDER FOR CENTRAL AUTOMATIC TELEPHONE EXCHANGE 
- MINISTRY OF HEALTH TENDER FOR MEDICAMENTS 
- NATIONAL ONCOLOGY CENTER TENDER FOR MEDICAMENTS 
- MINISTRY OF HEALTH TENDER FOR JALILABAD HOSPITAL 
 
¶2. SOUTH-KOREAN ENERGY PROJECT 
------------------------------ 
 
The Azerbaijan Investment Company and Korean company "Kepco" will 
sign an MoU on the construction of a private power station in Alat 
(site of Azerbaijan's new commercial port).  The project is 
estimated to be worth USD 750 million to 1 billion.  The power plant 
will be financed privately by Kepco and other potential investors. 
The 700-mega-watt power plant will sell power to a number of local 
energy distribution networks. 
 
¶3. ADB HIGHWAY PROJECT 
-------------------- 
 
The Government of Azerbaijan and the Asian Development Bank (ADB) 
are expected to sign the Multitranche Financing Facility (MFF) for 
the Azerbaijan highway system, including the Masalli-Astara highway, 
in mid-December.  The state AzerYolServis OJSC is conducting 
pre-qualification of contractors for the first stage.  The 
consultant will start work in January and prepare tender procedures 
by mid-2008.  Construction is expected to start in 2008.  U.S.-based 
Terra's feasibility study proposed constructing a new 
sixty-kilometer four-lane highway to run in parallel with the old 
road that that is to be rehabilitated.  Total cost of the 
243-kilometer Alat-Astara highway reconstruction project is 
estimated at USD 400 million. 
 
¶4. TRANSPORT INVESTMENTS USD 1 BILLION 
-------------------------------------- 
 
The Government of Azerbaijan has budgeted up to USD 1 billion for 
transportation projects in 2008, compared to the expected USD 600 
million in 2007.  The program includes highway, railway, and general 
transportation projects as vital components of the north-south and 
east-west transport corridors, renewal of the maritime and aviation 
fleet, and commencement of construction of a new international 
seaport.  A special railroad development program is estimated at USD 
1.2 billion and will be implemented in 2008-2011. 
 
¶5. AGRICULTURAL STATISTICS 2007 
------------------------------- 
 
The Azerbaijani State Statistics Committee reported that as of 
November 1, grain production had reached 1.846 million tons of grain 
crops from 705,100 hectares.  For the reported period, vegetable 
yield increased by 4.5percent and reached 1.182 million tons. 
 
BAKU 00001460  002 OF 005 
 
 
Harvest of potatoes grew by 0.7 percent and totaled 1.013 million 
tons.  Fruit and berry production was up 5.3 percent and reached 
515,200 tons.  According to Agriculture Minister Ismat Abbasov, the 
government has allocated 30m manats to promote corn production in 
Azerbaijan.  Cotton production has been declining in recent years, 
which the Government links to the global decline in the price of 
cotton. 
 
¶6.  FDI TOTALS USD 4.7 BILLION 
------------------------------ 
 
According to the GOAJ, foreign direct investment in Azerbaijan 
totaled USD 4.7 billion in the first 10 months of 2007 (USD 1.01 
billion in the first quarter and USD 2.448 billion in the second). 
FDI made up 63 percent of overall investments.  Oil and gas 
investments grew by 9.9 percent and made up 58.3 percent (USD 2.859 
billion) of all foreign investments.  FDI in the non-oil sector 
reached USD 233.4 million (a decline of 12.2 percent). 
 
¶7.  CARGO TRANSIT FALLS 
----------------------- 
 
Cargo transit through Azerbaijan totaled 4.847 million tons in Jan - 
Oct 2007, a drop of 478,800 tons or 11.38 percent from the similar 
period of 2006.  The State Customs Committee reports that a major 
part of transit goods was dispatched to Italy (1.42 million tons), 
Switzerland (1.3 million tons), Georgia (980,600 tons), Tajikistan 
(362,300 tons), Turkey (201,100 tons), Iran (160,000 tons), Russia 
(116,900 tons), Turkmenistan (123,400 tons), and Kazakhstan (78,100 
tons).  Exports: 674,600 tons - by sea, 2.908 million tons - by 
rail, 592,300 tons - by road, 3,100 tons - by air, and 5.312 million 
tons via pipelines.  Imports: 5.53 million tons - by rail, 336,100 
tons - via pipelines, 1.139 million - by road, 90,600 tons - by sea, 
and 21,600 tons - by air. 
 
¶8.  CONSULTANT FOR SECOND IPP 
----------------------------- 
 
The Azerbaijani government is set to select a consultant to assist 
with the preparation of the tender procedure for the construction of 
the second independent power producer (IPP).  The competing 
consortiums are:  BNP Paribas/Allen & Overy/MGB/Mott MacDonald, 
Latham & Watkins/Taylor-DeJongh Inc./Jacobs Consultancy, and Societe 
Generale/PB Power/OMNI/LeBoeuf, Lamb, Greene & MacRae. 
Consultations involve technical, financial and legal aspects of the 
project, preparation of tender documents and draft agreements, and 
their coordination with potential investors.  Among the bidders for 
the second power station to be constructed in Ganja or Sumgayit are 
International Power, Sumitomo Corporation, AES and Hanwa.  IPPs are 
expected to produce up to 20-25 percent of Azerbaijan's expected 
energy system capacity of 8,000-10,000 MWt. 
 
¶9.  GOAJ BUYS PART OF GARADAGH CEMENT 
------------------------------------- 
 
Heydar Babayev, Minister of Economic Development, announced that the 
Azerbaijan Investment Company (AIC) is set to purchase 10 percent of 
ownership in the Garadagh Cement Plant from Swiss owner, Holcim. 
Currently, the plant's ownership includes Holcim (79.5 percent), 
EBRD (10 percent) and a group of small minority shareholders.  AIC 
plans to participate in the reconstruction of the plant and the 
construction of a new cement plant.  The new plant with annual 
capacity of 1 million tons is expected to cost 150 million EUR. 
Azerbaijan's annual cement demand is 4 million tons. 
 
¶10.  POWER PRODUCTION SET TO INCREASE IN 2008 
-------------------------------------------- 
 
The state power producer Azerenerji expects to produce 21 billion 
kilo-watt hours of energy in 2008, compared to 20 billion kilo-watt 
hours in 2007.  The company forecasts growth of consumption due to 
introduction of new enterprises and production expansion at present 
enterprises.  Azerenerji believes it could fully satisfy the 
domestic demand.  Azerbaijan currently does not import power and has 
limited power exchange with Russia and Turkey (for Nakhchivan). 
 
¶11.  MILK-PRO'S NEW MILK FACTORY 
------------------------------- 
 
Milk-Pro LLC, with support of Azerbaijan Investment Company (AIC) 
and European Bank for Reconstruction & Development (EBRD), started 
 
BAKU 00001460  003 OF 005 
 
 
construction of a new milk-processing factory in the Hovsani 
settlement of Baku.  AIC reported that the enterprise is expected to 
have capacity of up to 150 tons a day.  The factory is expected to 
be operational in the second half of 2008. 
 
¶18.  CASPAR Procurement 
---------------------- 
 
The Caspian International Sea Steamship Line of Azerbaijan (CASPAR) 
announced that is has purchased three new ferries, scheduled for 
delivery in early 2008.  CASPAR has plans to purchase up to 11 new 
ships as part of its modernization plans in the next three years. 
CASPAR's current fleet consists of 75 major and 34 minor ships. 
Their total deadweight is 480,000 tons. 
 
¶19.  CASPAR Plans Caspian Shipbuilding Factory 
--------------------------------------------- - 
 
CASPAR announced plans to construct a Caspian Shipbuilding Factory 
in the Alat settlement, the location of the new Baku port.  The 
factory will be able to build and service a wide range of ships - 
from yachts to gross tankers, including those to transport Kazakh 
and Turkmen oil.  The Korean STX and the Azerbaijan Investment 
Company (AIC) will implement the project.  AIC is set to own 25 
percent of the project. 
 
¶20.  HEALTH MINISTRY PROCUREMENT 
-------------------------------- 
 
The Ministry of Health of Azerbaijan has announced an expression of 
interest (EOI) procedure for purchase and installation of equipment 
in the Medicine Quality Control Laboratory within WBG Health Sector 
Reform Project (HSRP).  For more information contact fm@ednet.az or 
call +99412 431 6121 (fax: +99412 431 1937).  The USD 50 million 
HSRP is the WB largest investment in country's social sector.  Total 
cost of the project is $86.75 million and 83% of its budget will be 
directed for medical and social services, 14% for central 
administration management, 3% for governance with compulsory medical 
payments. 
 
¶21.  JUSTICE MINISTRY TENDER 
---------------------------- 
 
The State Population Register Service under the Ministry of Justice 
of Azerbaijan has announced a tender for a concept-based plan and 
Technical Design Assignment on automation of obsolete documents 
register.  The documents should be submitted at the address: 36, 
Samad Vurgun Street, Baku.  The tender procedure will take place at 
4:00 pm November 30, 2007.  Contact phones: 596-39-18, 596-39-34. 
Contact person: Elnara Ahmadova. 
 
¶22.  GEYCHAY TELECOMMUNICATION CENTRE TENDER 
--------------------------------------------- 
 
Geychay Telecommunication Center (Aztelekom) of the Ministry of 
Communications & Information Technologies has announced a tender on 
quotation method for connection of rural electronic exchange lines 
and purchase of equipment 5 FOM-4 and 1 FSM-32 for use of free 
capacity area.  Deadline: November 30, 2007.  For more information 
apply to Center's Quotation Commission.  Contact phones: (167) 
5-44-99, 5-33-33, 5-23-66 (fax). 
 
¶23.  STATE BORDER SERVICE TENDER FOR CLOTHING 
--------------------------------------------- 
 
The State Border Service of Azerbaijan has announced a tender 
procedure for border guard clothes for 2008.  Estimate criteria: 
profitable price, ecologically clean product, observation of the 
agreement conditions and date.  Deadline: 4:00 pm December 22, 2007. 
 Address: 30, Azerbaijan Avenue, Baku; Frontier Service building. 
Unsealing of bids will take place at 3:00 pm on December 28, 2007. 
For more information please contact I.  Akbarov and Z. Jafarov at 
call (+99 412) 493-53-53; 498-01-32. 
 
¶24.  MOH TENDER FOR MEDICAMENTS AND PRODUCTS 
-------------------------------------------- 
 
Ministry of Health of Azerbaijan announced tenders to purchase 
medicaments and products for Bilasuvar Regional Hospital and Ali 
Bayramli City Hospital for 2008.  Bilasuvar Deadline: 6 PM, December 
17, 2007.  Contact addresses: Bilasuvar, 82, H.  Aliyev Street.  Ali 
 
BAKU 00001460  004 OF 005 
 
 
Bayramli deadline: 5 p.m, January 7, 2007, address: Ali Bayramli, 
16, H.  Aliyev Avenue.  Contact phone: (0197) 5-03-58.  Contact 
person: T.E.Aliyev. 
 
¶25.  MOH TO PURCHASE EQUIPMENT AND FURNITURE 
-------------------------------------------- 
 
Ministry of Health of Azerbaijan announced a poll by quotation 
method to purchase goods, equipment, and furniture for Guba Central 
Regional Hospital for 2008.  Tender commission informed that the 
tender is announced by 10 lots: to purchase stationery and carry out 
disinfection services; printing and typographic products; all types 
of goods and materials; construction materials; repairs of 
transportations; purchase of spare parts and oils; communal and 
communicational services; purchase of smooth inventory, bedroom 
outfit; furniture; kitchen outfit; baby food.  Deadline: December 
15, 2007.  Address: Guba, 12, Fatalikhan Street.  Contact phone: 
(169) 5-29-58 (fax: (169) 5-19-70). 
 
¶26.  MOH TENDER FOR MEDICAMENTS AND EQUIPMENT 
--------------------------------------------- 
 
Ministry of Health of Azerbaijan announced a tender to purchase 
medicaments, equipment, and products for Guba Central Regional 
Hospital for 2008.  MOH intends to purchase narcotics, anesthesia, 
and psychotropic drugs, diabetes drugs, general group medicaments 
and bandages, medical oxygen, medical outfit, X-ray film and 
reagents, bakery goods, inferior medical equipment, devices, tools 
and their installation and repairs, major repairs of social, and 
other items.  Deadline: December 27, 2007.  Address: Guba, 12, 
Fatalikhan Street.  Contact phone: 169-5-29-58 (fax: (169) 
5-19-70). 
 
¶27.  ROAD REHABILITATION AND REPAIRS TENDER 
------------------------------------------- 
 
City of Khirdalan has announced a two-lot tender procedure for 
rehabilitation and capital repairs of internl district roads. 
Deadline: 5 PM December 25, 207.  Address: 7, M.  Rasulzadeh 
Street, Khirdalan  Contact phone: (0160) 5-20-01. 
 
¶28.  MOH TENDER TO PURCHASE MEDICAMENTS 
--------------------------------------- 
 
Ministry of Health of Azerbaijan announced a tender to purchase 
medicaments for Gabala Central Regional Hospital for 2008. 
The tender is announced by two lots: to purchase general group drugs 
against diabetics, medical outfit and to purchase narcotics, 
anesthesia, and psychotropic drugs.  Those who want to take part in 
the tender must submit the documents till December 27, 2007, 3 p.m. 
to the address: Gabala, 12, A.Sakhat Street.  Tender proposals will 
be submitted till January 9, 2008, 6 p.m. 
 
¶29.  MOH TENDER TO PURCHASE DRUGS 
--------------------------------- 
 
The Ministry of Health of Azerbaijan has announced tender procedures 
for purchase of medicaments, bandages and products for Salyan and 
Ujar central regional hospital and a goods poll for Ujar central 
regional hospital for 2008.  Required jobs are: repairs and 
construction, purchase of hard inventory, products and bakery, motor 
spare parts, farm products, stationery, firewood.  First tender 
deadline: December 27, 2007.  Address: 93, Dada Gorgud Street, Ujar. 
 For more information call 5-01-71.  Contact person Ya.  Kerimov. 
Second tender deadline: December 27, 2007.  Address: Salyan Highway, 
Neftchala central district hospital.  For more information call 
2-38-485.  Contact person A.Askerova . 
 
¶30.  REAL ESTATE REGISTER SERVICE TENDER 
---------------------------------------- 
 
The Real Estate Register Service of Azerbaijan has announced a 
tender procedure for purchase of diesel generators.  Capacity of 11 
generators should be 40-50 KV and six generators 75-85 KV.  The 
applicants can receive additional information at the address: 1A, 
Z.Khalil, Baku; Real Estate Register Service.  Deadline: December 
20, 2007.  Contact person: Emil Mammadov: 
emil.mammadov@hotmail.com, spanahov1@yahoo.com.  Telephone and fax: 
+994 12 514-05-71. 
 
¶31.  MOF TENDER FOR AIR VENTILATION SYSTEMS 
 
BAKU 00001460  005 OF 005 
 
 
------------------------------------------- 
 
The Ministry of Finance of Azerbaijan has announced a tender 
procedure for installation of air conditioners and ventilation 
system in its administrative building.  Deadline: 10 pm December 24, 
¶2007.  Address: 83, Samed Vurgun Street, Baku.  For more information 
call 493-96-48 (fax: 93-05-62) (from 10 am till 5 pm; from November 
12 to December 24, 2007). 
 
¶32.  ZAGATALA TENDER FOR RECONSTRUCTION OF STREETS 
--------------------------------------------- ----- 
 
Zagatala region executive power has announced a two-lot tender 
procedure for refurbishment of streets and for improvement, 
landscape gardening and lighting in the city.  Deadline: 5 pm, 
January 7, 2008.  Address: Zagatala regional executive office. 
 
¶33.  GEYCHAY TENDER FOR TELEPHONE EXCHANGE 
------------------------------------------ 
 
Geychay Telecommunications Centre has announced a tender procedure 
for full reconstruction of Geychay central district automatic 
telephone exchange.  Deadline: 5 pm, January 3, 2008.  Address: 112, 
A.Kerim Street, Geychay.  For more information call (167) 5-33-33. 
 
¶34.  MINISTRY OF HEALTH TENDER FOR MEDICAMENTS 
--------------------------------------------- - 
 
Ministry of Health of Azerbaijan announced tender to purchase 
medicaments and products for Masalli Central Regional Hospital for 
¶2008.  The tender is announced for 4 lots: to purchase medicaments 
for diabetics, general group medicaments and bandages, reagents, 
X-ray and laboratory tools, prophylactic serums.  Deadline: January 
6, 2008.  Address: Masalli, 100, Dadva Street.  Contact phone: 
5-33-63. 
 
¶35.  NATIONAL ONCOLOGY CENTER TENDER FOR MEDICAMENTS 
--------------------------------------------- ------- 
 
Ministry of Health of Azerbaijan announced tender to purchase 
medicaments for National Oncological Center for 2008. 
Deadline: 6 p.m., December 28, 2007.  Address: Baku, Yasamal 
district, 10, Sharifzadeh Street.  Contact phone: +99412 432 3941. 
Contact person: Yusif Babayev. 
 
¶36.  MINISTRY OF HEALTH TENDER FOR JALILABAD HOSPITAL 
--------------------------------------------- -------- 
 
Ministry of Health of Azerbaijan announced tenders to purchase 
medicaments, bandages, and products for Jalilabad Central Regional 
Hospital and Ganja city Health Department for 2008. 
The first tender is announced to purchase general group medicaments 
and bandages, diabetic drugs, reagents and X-ray tools, narcotic 
medicaments, psychotropic medicaments, antibiotics and disinfection 
drugs.  The second tender is announced to purchase products, 
medicaments and bandages. 
Deadline for the first tender 5 PM, January 10, 2008.  Address: 
Jalilabad region, 4, Sport Street.  Contact phone: 3-46-03.  Contact 
person: Ilkham Aliyev.  Deadline for the second tender 5 PM, January 
4, 2008.  Address: Ganja, 40, Nizami Street.  Contact phone: 
56-55-33.  Contact person: Gulnaz Abbasova. 
 
DERSE