President of Azerbaijan on SOCAR, Other State-owned Companies

“Everyone knows why the Investment Holding was created. This was also mentioned in my decree – to improve the management system. The management system of state-owned companies lags behind and does not meet modern requirements. This management system is used to knock money out of the budget. “

Azerbaijani President Ilham Aliyev said this at a press conference for foreign and local media on February 26, answering a question from a Reuters correspondent whether the transfer of the State Oil Company (SOCAR) to the Azerbaijan Investment Holding (AIH) can be considered as a preliminary stage of privatization.

According to Ilham Aliyev, at the moment practically no state-owned company is self-sufficient.

“There is always a need for subsidies from the budget. This cannot continue. On the other hand, given the current situation, as well as the restoration of Karabakh, the strategic infrastructure should remain in the hands of the state. This is unambiguous. Otherwise, we will not be able to restore the territories. At this stage, our goal is to bring the corporate governance of state-owned companies to international standards. It is necessary to ensure the necessary control,” Aliyev explained.

According to him, supervisory councils are created in the structures of state-owned companies, which include government representatives, so that there is no lack of control, not to waste money.

“Today state-owned companies have become a big burden for the state, even SOCAR, which is the largest taxpayer in Azerbaijan. Until recently, it also received subsidies from the state for gasification. This cannot continue like this. There are, of course, a few exceptions. However, most of them are ineffective both in terms of leadership and in terms of improving governance. Those who do not want to work transparently according to the new rules will be held accountable,” the President stressed.

“As for the privatization of state-owned companies, then at least in 2021 this issue will remain open,” the President said. “However, certain areas of work of some state-owned companies need to be developed at the expense of private capital. First of all, I would like to note the energy. We have opened this industry for private investment,” Aliyev stressed.
* On January 23, by the decree of the President of Azerbaijan, the Supervisory Board of SOCAR was created, and the Economy Minister Mikayil Jabbarov was appointed the head of it. In addition, the President transferred SOCAR to the management of the Azerbaijan Investment Holding and instructed him to develop a new structure of the State Oil Company within six months. In turn, the Supervisory Board will develop a new strategy for SOCAR.

Caspian Barrel