StateOwned Enterprises Azerbaijan SOEs in Azerbaijan SOEs play

State-Owned Enterprises Azerbaijan

SOEs in Azerbaijan SOEs play a major role in the national economy of Azerbaijan ◦ ◦ Significant contributors to national wealth Providers of essential goods and servicers Employers in key sectors Engaged in activities of national importance, including extraction of natural resources (oil & gas), infrastructure, transport, communications, water, and energy. GDP contribution: ≈40% Significant SOE reforms to reduce the reliance on the State Budget after the reduction in the oil prices ◦ Significant administrative and economic reforms since 2016 ◦ SOE reforms are envisaged in the 12 Strategic Roadmaps

SOEs in Azerbaijan 1. State Oil Company of the Republic of Azerbaijan 2. "Azerenerji" Open Joint Stock Company 3. "Azerbaijan Airlines" Closed Joint-Stock Company 4. "Azerbaijan Railways" Closed Joint-Stock Company 5. "Azersu" Open Joint-Stock Company 6. "Azerishiq" Open Joint-Stock Company 7. "Azeristiliktechizat" Open Joint-Stock Company 8. "Azerbaijan Melioration and Water Management" Open Joint-Stock Company 9. "Azerbaijan Caspian Shipping company" Closed Joint-Stock Company 10. "Azeravtoyol" Open Joint-Stock Company 11. "Aqrarkredit" Closed Joint-Stock Non-Banking Credit Organization 12. "International Bank of Azerbaijan" Open Joint-Stock Company 13. "Azer-Turk-Bank" Open Joint-Stock Company 14. State Insurance Commerce Company of the Republic of Azerbaijan 15. "Agroleasing" Open Joint-Stock Company 16. "Port of Baku" Closed Joint-Stock Company 17. "Baku Metropolitan" Closed Joint-Stock Company 18. "Azer. Cosmos" Open Joint-Stock Company 19. "Aztelecom" Limited Liability Company 20. "Baku Telephone Communication" Limited Liability Company

SOE Reforms Strategic Roadmaps ◦ Diversification of economy and reduction of State’s participation in the existing state-owned enterprises ◦ Establishment of good governance practices in SOEs to improve activity and attract private sector investment ◦ Revival of inactive enterprises ◦ Public-Private Partnership Creation of Azerbaijan Industrial Corporation ◦ Central management of inactive industrial and agricultural SOEs ◦ Raise the effectiveness in the management of government properties Privatization of smaller and medium-sized SOEs

Corporate Governance ADB-Improving Governance and Public Sector Financing Efficiency Program ◦ Sustain reform initiatives in the areas related to rule-based budgeting, corporate governance improvements, implementation of international financial reporting standards SOEs are required to use IFRS and are regularly audited by international auditors By the decision of the Cabinet of Ministers of the Republic of Azerbaijan No 257 dated June 4, 2019 the following rules were approved: ◦ Rules of Assessment of Efficiency of Activities of SOEs ◦ Rules and Standards for Corporate Governance in SOEs ◦ Rules for the provision of bonus payments to members of governing bodies of legal entities based on the results of activities of the SOEs

Public-Private Partnership (PPP) Execution of infrastructure projects through PPP Establishment of PPP Center under the Small and Medium Business Development Agency of the Republic of Azerbaijan Development of PPP Law Potential sectors ◦ ◦ ◦ Education Health Transport Solid Waste Management Logistics First PPP project supported by ADB’s technical assistance: construction of student accommodation for Baku State University and Oil and Industry University

Thank you!