ADB proposes development of innovative financial instruments to activate PPP mechanism in Azerbaijan

Developing performance-based contracts that enable private companies to deliver public services in Azerbaijan can be an effective strategy to increase private sector participation, Report informs referring to the Asian Development Bank (ADB).

"Private sector expansion faces numerous policy challenges needing attention. Tackling these challenges requires a comprehensive approach that includes reforming state-owned enterprises (SOEs), enhancing the environment for public–private partnership, building human capital, and investing in green and resilient infrastructure. Addressing these issues is important to create a more diversified, competitive, and green economy."

"Public–private partnership (PPP) can increase private sector participation and make infrastructure projects and service delivery more efficient and sustainable. In 2022, Azerbaijan adopted a new PPP law that promises to launch private sector growth alongside the public sector. However, it is still at an early stage and requires more time to attain substantial results. At this stage, PPP projects can be boosted by building capacity in the country to select, screen, and prioritize them. In addition, identifying potential opportunities and developing innovative financing structures, such as the use of credit-enhancement products, can help PPP projects become bankable, more cost efficient, and thus able to provide higher quality services in transport, energy, water supply, wastewater treatment, and education," the bank noted.