Presidential Decree On Construction And Infrastructure Projects In Azerbaijan

The President of the Republic of Azerbaijan has approved a Law On the Implementation of Special Financing for Investment Projects in Connection with Construction and Infrastructure Facilities, dated 15 March 2016.

In essence, the new Law introduces options for the potential financing of Build-Operate-Transfer (BOT) projects.

The BOT model is defined in the Law as the payment, in accordance with agreements with the Ministry of Industry, by consumers of goods and services produced by investors (defined as resident and non-resident legal entities, their branches or permanent establishments), or the payment by the Ministry of Industry of investment expenses (including income earned) to investors in respect of certain investment projects listed in the Law.

Financing under the BOT model will apply to the construction (including current and capital repair, renovation and restoration), the operation and the transfer, inter alia, of the following facilities:

bridges, tunnels; water reservoirs, water purification facilities, irrigation, drinking and household and sewage systems, main gas pipelines, underground gas storage facilities, intracity gas networks; press and conference centers, as well as educational, health, culture and tourist facilities; commercial buildings, wholesale markets, factories and industrial sites; sports centers, hostels, rest and entertainment parks; industrial, high technology and agricultural parks, automated management systems based on high technologies and other systems in the area of information technologies; enterprises on electricity generation, distribution and sale; highways and railways, bus station complexes, logistics centers, underground and surface parking lots, metro lines and stations; special economic zones, sea ports and airports used for civilian purposes, complexes consisting of cargo, passenger transportation, and yacht ports. Investors will be responsible for the design, financing, construction (including current and capital repair, renovation and restoration), and use of the BOT project.

The President of Azerbaijan will determine the conditions for carrying out investment projects, the requirements to be met by investors, depending on the type of construction and infrastructure facilities, the terms and conditions of agreements to be concluded with investors and the rules for the determination of the value of goods and services obtained as a result of investments.

Presumably several concepts introduced...