ADB Director General: Preparation of new cooperation strategy with Azerbaijan will begin in 2023

Azerbaijan's cooperation with the Asian Development Bank (ADB) is dynamically developing. The country is not only a recipient of loans but also a donor to the ADF and has allocated about $2 million to the fund. Considering the long-term partnership, the preparation of the next Azerbaijan-ADB cooperation strategy for 2024-2028 will begin in 2023.

Report presents an exclusive interview with ADB Director General Yevgeniy Zhukov:

- Azerbaijan became one of the ADB donors. Is the nation quite active as a donor? Is there any agreement to expand this activity of the government of Azerbaijan?

- Azerbaijan joined ADB in 1999. Since then, we have provided about US$ 5.2 billion in assistance to the country.

At the same time, when we were replenishing our Asian Development Fund (ADF) - concessional window, we were very happy to learn that Azerbaijan expressed its interest to contribute to ADF, which provides assistance to the poorest countries in Asia and the Pacific. Azerbaijan provided about US$2 million to ADF. We hope that Azerbaijan will continue its contributions in the next replenishments, which will start being negotiated next year.

We will be happy to continue having contributions from Azerbaijan, but we will also continue providing assistance to the country at the same time.

Next year, we have three planned projects for the country: an irrigation project in the Nakhchivan Autonomous Republic; policy-based assistance for the economic reforms program in the country; and a combination of policy reforms and investment support for vocational education and training, which we think is a very important area for Azerbaijan to strengthen.

Next year, we will also start working on our next country partnership strategy with Azerbaijan for 2024 - 2028. This document, to be prepared in close cooperation with the government, will determine the long-term priorities of cooperation.

In general, we are very interested in ramping up our support towards economic diversification and the green transition, because Azerbaijan is highly dependent on the hydrocarbon sector, as it accounts for half of the economy and the majority of export earnings. So we would like to work more with the government in this area.

- ADB has experience in supporting energy projects in Azerbaijan. What might be the next project in this area, for instance, the expansion of the Southern Gas Corridor?

- Several years ago, at the request of the government, we approved a multi-tranche financing facility to enhance the power distribution network in Azerbaijan. This was a large program, close to US$1 billion, out of which US$250 million was fully disbursed.

Just last month, ADB’s private sector window approved a contribution to the solar power project in the Alat district of the country, sponsored by UAE’s Masdar company. ADB is providing around US$22 million to this effort.

Further to that, we’re working on some pilots in floating solar power. We also discussed with Azerbaijan and other Central Asian countries possible improvements in infrastructure, trade, electricity, and gas.

We recently adopted the Central Asia Regional Economic Cooperation (CAREC) Strategy 2030. Under this strategy, one of the trends is to improve the energy market in Central Asian countries. Thus, areas to improve are interconnectivity, power, gas, and the ways we try to improve trade in these areas. In general, this cooperation program includes Azerbaijan, Georgia, Central Asian countries, and Pakistan.

Currently, the study is ongoing, maybe next year we will have more ideas on how this cooperation is going to work. There’s a scope to improve the connectivity within the region, but there’s also scope for these countries to export energy recourses to other parts of the world.

Six or seven years ago, we provided financial support to Azerbaijan for the construction of the Southern Gas Corridor (SGC). At that time, we provided half a billion dollars and, as you know, the project has been successfully completed and is now operating.

We know the government’s plan to expand the corridor. In terms of financial needs, we have not been approached so far by the government. If we are, then we will look at this proposal in light of the new energy policy that ADB approved late last year, which mandates that our efforts should be focused on the development of renewable energy in the Asia Pacific.

-ADB has already invested into the first renewable energy project in Azerbaijan. Is it possible to redirect the remaining funds from the "Investment Program for the Reconstruction of the Electricity Distribution Network" worth US$1 billion to renewables as only US$250 million of these funds have been invested so far?

-The enhancement of the power distribution network program in Azerbaijan will come to an end this December. But we will be keen to look at any opportunities in Azerbaijan to help the government and private sector develop renewable energy sources, whether it is solar, wind, or other sources.

- Which spheres, besides energy, are the ADB interested in?

- In general, we focus a lot on regional connectivity, railways transportation, vocational training, and education. The new priorities will be identified as we develop our next country partnership strategy, but I assume that we would like to see areas such as energy transition, green energy, and climate change as a major part of our partnership with Azerbaijan.

The overall cooperation is excellent. In the beginning, the country joined as a recipient, but now it’s also a donor, helping the poorest countries in Asia and the Pacific.

During my trip here, we have already had several good meetings, including with the Minister of Finance. We also had a very productive trip to the Nakhchivan Autonomous Republic. The feedback is very positive, and we look forward to enhancing the collaboration with Azerbaijan in line with its priorities.