Summer 1995 (3.2)
Industry in Azerbaijan
Prospects for Development
The Republic of Azerbaijan is probably best described as an industrial country with a fairly high developed agricultural industry. The manufacturing industry is primarily comprised of the oil and gas sector as well as the three fields-engineering, metallurgy and electro-energy.
During the Soviet period, more than 70% of the Azerbaijan's production was sent to Russia. Since Azerbaijan is now starting to enter the free market, the scope of production naturally has changed and new technology has been introduced. There is a great desire to equal the quality of production on world standards. Also the oil contract with Western companies has given a great impetus to the entire industry.
The core of this sphere of industry is a state-owned company, known as Azneftekhimmash, which is structured to include the entire gamut of engineering research-invention of new equipment, production, and application to industry. There are three research institutes, ten large plants, and more than 120 enterprises employing about 60 thousand people.
Primarily the company develops oil and gas industry-oriented equipment, drilling and hydro-geological equipment, as well as transportation used at drilling sites for obtaining oil. For some types of equipment, Azneftekhimmash used to hold the monopoly for supplying the entire former Soviet Union. There are thirteen plants which manufacture oil and gas equipment which includes pumps, well installations, fractionated distillation equipment, anti-eruption equipment, drilling equipment, water and gas taps, derricks, and offshore oil production platforms.
Although manufacturing for the oil engineering industry has been established for a long time in Baku, manufacturing in the electro-technical, commodities, and the computer industries is fairly new.
The electro-technical industry is made up of five large companies-Bakkondisioner, Azerelectroterm, Azerelectromarsh, Azerelectrosvet and Chinar. They produce air conditioners, a variety of electric kitchen supplies, refrigerators, electro-thermal equipment, electric engines, power transformers, insulation materials, industrial furnaces, electrical welding equipment, cables, light bulbs, lamps, fans, etc. There are already more than ten joint ventures in this sphere of industry.
The equipment building and radio-electric industries comprise more than 50 companies, ranging from large to small. Production includes radio-electronic appliances, Korvet micro computers, and radios.
A new group of companies is beginning to emerge that specializes in machine construction for agriculture. New technology will be incorporated. This industry is looking for investment.
Several types of metals (aluminum, lead, zinc, cobalt, copper, mercury, silver and gold) have been discovered and mined for quite some time in Azerbaijan. During the past decades this area has become more highly developed resulting in the creation and development of a metallurgic industry in Azerbaijan. The monopoly is held by a state company which is made up of more than 20 companies.
Priority is placed on the aluminum industry. The raw material, alunite, is mined from fields in the Dashkesan region. At a plant in Ganja, the alunite is converted to alumina and in the past about 500 thousand tons has been produced annually.
Alumina is then transported to the city of Sumgayit near Baku and converted into aluminum. These days production is quite limited and only 100 thousand tons is being processed or 20% capacity. The remainder is being exported from the Ganja plant. Apart from aluminum, several by-products are produced from alunite. Both the Sumgayit and Ganja plants are under reconstruction.
Azerbaijan has five companies of non-ferrous metallurgy which process aluminum casts, rolled metal, construction materials and household commodities. Ferrous metallurgy is quite developed. In Dashkesan, there is a plant which processes iron ore which contain about 60 percent iron.
In Sumgayit, there is a tube producing plant, the largest of its kind in Azerbaijan. This plant was designed in World War II to construct pipe for the oil and gas industry. It has four main shops, 13 support shops, a lab and six smelters, each with a 150 ton production capability. Production of pipes for the oil industry comprises 80% of the entire production. In the past, pipes from Sumgayit used to be exported to 20 countries outside the Soviet Union.
A new industry is emerging related to precious metals including gold. Azerzoloto, a state company holds the monopoly. The company operates a research institute which is highly recognized outside of Azerbaijan.
Under Soviet rule a major electric power industry was developed in Azerbaijan. In 1967, the combined capacity of its electric power plants was 2,612,000 kw. The country now produces 43.5 billion kilowatts of electrical energy from hydro-electric dams on the rivers Kur, Araz and Terter. Azerbaijan's electrical energy extends over the entire territory of Azerbaijan and used to connect with Russia, Georgia, Armenia, Turkey and Iran.
The full capability of the electrical energy complex is 5,000 MWt produced at 3 fuel stations, four principal and several small hydroelectric stations. Electrical cables extend more than 100 thousand kilometers in Azerbaijan.
Fortunately, Azerbaijan has the capability to develop its own energy. What is needed is investment capital to initiate some of these projects. Foreign companies are now in the process of negotiating the reconstruction of the Ali-Bayramli hydro-electric plant and to build a new station in the Absheron Peninsula which would have the capacity of 520 MWt. The European Bank for Reconstruction and Development has provided a loan of 490 million (ECU) to complete the construction of a hydro-electric station in Yenikand. Plans are underway for the state company, Azerenerji, to soon become privatized, a process that when it is in place throughout the country will totally revolutionize and rejuvenate the entire manufacturing industry in Azerbaijan.
From Azerbaijan International (3.2) Summer 1995.
© Azerbaijan International 1995. All rights reserved.