Caspian Energy (CE): Mr. Aybek, the recent speeches and reforms of President Ilham Aliyev have set new objectives for the Azerbaijan economy with a focus on the development of the non-oil sector. What impact did they have on the sector of infrastructure and industry, where the Company you lead is operating?
Göksel Aybek, General Director of Akkord Industry Construction Investment Corporation OJSC: I would like to highlight that the development of the non-oil sector in Azerbaijan is not something new. The foundation of today’s achievements in this field has been laid down previously, and the government programs adopted in subsequent years are the result of the ongoing independent and sound economic policies. At the Cabinet session dedicated to the socio-economic development for the 9 months of 2015 and objectives for the future President Ilham Aliyev said that the non-oil sector in GDP accounts roughly for 70%. The economic indicators stated by the Head of State show that for 9 months the economy only increased by 3.7%. Here the share of the non-oil economy is 6.4%, industrial production accounts for 2.1% and non-oil industry for 10.2%. Naturally, these figures are quite high indicators and certainly did not arise by themselves. On their background we can notice the strong political will along with the deliberate economic strategy as well as hard work.
Since the first days of operation Akkord Industry Construction Investment Corporation OJSC has been committed to the domestic and foreign policy pursued by the Head of State and as one of the private sector representatives Akkord is making all efforts to contribute to the economic development in concrete areas. This can be seen in the implementation of both important government programs and social programs. This is the very reason why we are always taking the leading position in implementing objectives the Head of State sets for development of the non-oil sector. The targeted work implemented in the past years enabled the Corporation’s transition to a new progressive corporate governance system. The activities of the Corporation are diversified and aligned with international standards. Extensive work has been performed to boost a growth of industrial production and export capacity. From this point of view, when choosing the proper direction for development on our chosen path, a clear position in the objectives set by the head of state and a sustainable economic strategy precisely indicating them is of great importance.
CE: What changes do you think are necessary for a further development of business?
Göksel Aybek: I think in the recent years the country’ top leadership and government agencies have taken a lot of important steps to boost the development of the non-oil sector and entrepreneurship. Abandoning unreasonable and unnecessary checkups in the private sector, important changes in the field of tax policy, export promotion activities, transparent mechanisms in the areas of licensing and customs system, etc. have created perfect opportunities for the private sector. Before our eyes is the in-depth study of the progressive experience of some developed countries in various sectors and its application with a due consideration of the local situation and conditions, creation of new mechanisms of transparency, which in certain areas can serve the example for the world’s nations.
President Ilham Aliyev has declared the 2016 year to be the year of deep economic reforms. Extensive work has been performed in this area since the beginning of the year. Orders and laws have been signed to improve the business environment, boost a rise in the export potential, attract foreign investment and support a growth of domestic production. The Law of the Republic of Azerbaijan “On antitrust activity”, “On regulation of checkups carried out in the sphere of business and protection of entrepreneurs’ interests”, as well as amendments introduced to the laws and relevant legal documents on tax policy are of paramount importance in this regard.
I believe that consistent monitoring of economic policy will form a basis for instant response to changes in the global economic system and new challenges. Naturally, we will conduct our operations in the country on the basis of the overall development strategy built up in accordance with these challenges and multiply our achievements.
CE: What contribution is Akkord making to the development of the non-oil sector of the country?
Göksel Aybek: 10 years of operation of Akkord Corporation in the areas of construction, real estate, manufacturing, engineering services, project management, services involving machinery in use in construction and industry have enabled to create a working capital measured with large sums. Since the first days of operation the Corporation has expanded its business portfolio and supplemented construction work with production, construction and engineering services. Our business structure is as follows: construction accounts for 65%, real estate for 14%, production for 12%, engineering and project management for 6%, services for rendering construction and industrial machinery for 3%.
For 10 years of operation the Corporation has completed the implementation of 17 infrastructure projects, including the country’s first ever concrete road. The Corporation took part in the reconstruction of water and sewage systems in the 5 regions of the country, several of them have been successfully completed.
The Baku-Guba-the Russian border highway, the Galaba Meydani tunnel-type road junction, the tunnel-bridge complex at the intersection of Heydar Aliyev, Babak and Shah Ismayil Khatai avenues, the underpass at the intersection of Ataturk Avenue with Hasan Aliyev Street, the Zygh Circle-Heydar Aliyev International Airport highway, the Shabran bridge, the pedestrian underpass with different escalators at the intersection of Fizuli Street with Bulbul Avenue and Rashid Behbudov Avenue are only a few infrastructural projects implemented in the country.
In total, the contract value of 25 completed and ongoing infrastructure projects in Azerbaijan and abroad is $2.3 billion.
Along with infrastructure construction the Corporation has made significant progress in the production of construction materials and currently operates the cement plant with the annual production capacity of 1 million tonnes, 10 concrete plants with the annual production capacity of 2 million cubic meters, 5 asphalt plants with the production capacity of 1,000 tonnes/hour, 3 steel production plants with the annual production capacity of 22,200 tonnes, 2 brick factories with the annual production capacity of 22 million units, the marble and granite factory with the production capacity of 100,000 square meters per year, the prefab plant producing annually 76,000 cubic meters of concrete pipes and girders, and 100,000 square meters of fiberglass concrete, as well as the knitwear factories producing uniforms, men’s and women’s clothing. These industrial sites produce cement, concrete, fibre reinforced concrete, precast concrete structures, marble, roofing materials, light metal equipment, asphalt, brick, sand, gravel, and other sorts of construction materials.
Akkord Corporation also has obtained the extensive experience in construction of residential buildings and other public facilities of various purposes. For 10 years the Corporation has been constructing and commissioning housing estates with over 1,000 apartments in total in the Yeni Yasamal, Khatai and Narimanov districts of Baku. The total area of flats that Akkord constructed in Azerbaijan under the implemented projects is approximately 900,000 square meters. I would like to highlight that due to the renewed activity in this area we have a lot of extended plans and, starting from this year, we will begin construction of modern residential complexes under 5 different projects as part of the Greater Baku Development Program.
CE: Which production facilities form a “backbone” of the Corporation? Do you plan to expand their activities?
Göksel Aybek: The scheduled structural changes performed in different industrial areas inside Akkord Corporation for the past two years have resulted in establishing such limited liability companies as Akkord Marble Granite LLC, Akkord Concrete LLC, Akkord Prefab LLC, Gazakh Cement Plant LLC, Akkord Steel Construction Company LLC, Akkord Hydrotechnical Construction Company LLC, Akkord Asphalt LLC, Akkord Textile LLC, Akkord Brick LLC, Akkord Transport LLC, Deutsche Fassaden Technologien LLC, Bridge Tunnel Construction LLC, Property Investments LLC, and Accopen LLC. Each of the said LLCs may be considered as an industry-leading company in its field of expertise. However, Gazakh Cement Plant LLC, Akkord Steel Construction Company LLC, Akkord Marble Granite LLC and Akkord Prefab LLC lead the pack in terms of the volume of production, turnover, number of employees.
The annual production capacity of the Cement Plant is 1 million tonnes with a potential increase up to 3 million tonnes, this figure determines its value among the other structural units of the non-oil sector.
Akkord Steel Construction Company LLC started its operation in late 2015. This company was established on the basis of 3 plants (Mingachevir Machinery Plant, Balakhani Steel Production Plant and Khyrdalan Steel Production Plant) previously operating as part of Akkord Industry Construction Investment Corporation. Of these, the Khyrdalan Steel Production Plant only occupies the area of 5.5 hectares. The company has a high potential of manufacturing products with the best quality domestically and in some areas even in the region. The plant underwent the extensive reconstruction. It is equipped with the brand-new equipment made in Turkey, US and Germany. There are three shops within the plant: the fabrication shop, the smelting shop and the facade cladding production shop. These are intended for a shift work for 450 employees. Akkord Steel Construction Company LLC with the monthly production capacity of 1,200 tonnes operates the modern cement plants, has the possibilities to produce various steel structures for the agro sector, including different silo towers, bunkers, platforms, conveyors, rollers, mesh screens, overpasses, cast steel structures of desired size and shape, protective metal meshes, concrete-framed meshes and corrugated sheets for fences. The modern laboratories available at the company secure the manufacture of top quality products.
The plant operated by Akkord Marble Granite LLC is one of the largest marble and granite producing companies not only within the Corporation, but also in the entire region.
The Zygh-based plant operated by Akkord Prefab LLC is also among the companies with the high potential for production of bridge beams, water and sewage pipes and other reinforced concrete products.
CE: President of Azerbaijan Ilham Aliyev has set the objective to focus on export-oriented products. Are the cement plant and other Corporation-run production facilities ready to compete in the international markets? What other products is the Corporation ready to offer to the international markets?
Göksel Aybek: Since we have been widely involved in regional and international infrastructure projects for several years, in the neighboring and abroad countries we are perceived and known as a reliable transnational company. Naturally, this gives us a certain advantage of being perceived as a company of export-oriented products in the foreign market. From this perspective, we highly appreciate the export-oriented products, namely cement, prefabricates, marble, granite, and steel structures manufactured at Gazakh Cement Plant LLC, Akkord Steel Construction Company LLC, Akkord Marble Granite LLC, Akkord Prefab LLC. I would like to emphasize that against the backdrop of the serious and healthy competition between cement producers the Gazakh Cement Plant has been the first to start clinker export to Georgia.
In addition, specific prefabricated products, used when implementing infrastructure projects in Azerbaijan and Kazakhstan, have been produced at enterprise of the Corporation.
The export-oriented activity in the mentioned areas is one of the important lines of our strategic development and I hope that we will make big achievements in this area in near future.
CE: Akkord is actively engaged in TANAP project and the only Azerbaijani company which has signed an agreement on construction of the gas pipeline section. What stage have the operations, carried out within the framework of the project, reached?
Göksel Aybek: Akkord Corporation, inspired with a new strategy realized under the support of the government, has become the only Azerbaijani company among 15 participants which passed the prequalification selection to participate in the tender for implementation of energy projects TANAP and TAP bearing international importance and envisaging transportation of natural gas extracted from the Azerbaijani field Shah Deniz 2 to Europe across the territory of Turkey.
Akkord Corporation involved in the tender jointly with the Turkish company Yüksel İnşaat A.Ş. and Italian SICIM S.p.A entered into the list of tender winners, announced by TANAP Doğalqaz İletim A.Ş.
According to the agreement reached over the TANAP project, Sicim-Yüksel-Akkord” consortium plans to build a 450km long section, located between the 375th and 825th km (Erzurum-Askala-Sivas-Yildizdeli) of a 1337km long pipeline section running from the Georgian border to Eskishehir.
According to the project, Akkord has been assigned to build 1,384 crossings on a 450km long section, including 422 river crossings 15 of which are large ones, 14 highways and railway crossings, 14 blocks of shut-off stations, one unit for pipeline cleaning and other operations.
The large amount of work has been performed as part of this ambitious project, resulting in great achievements made. Under Lot2 in early 2016 the Corporation performed 152 welding operations within a day in difficult climatic and terrain conditions, which has become a record indicator on the TANAP project and has been appreciated by the project managers.
On this occasion a poster has been prepared and now it is demonstrated in the TANAP office. For clarity, I would like to highlight that this work includes welding of the 2,048-metre pipeline within a day. In April, the Corporation together with its project partners completed the construction of the first cross-cut junction at Kr753 site, using microtunnel boring machines in the Sivas region of Turkey. Currently, work is well on track to construct 10 more similar junctions as envisaged by the project. According to the contract signed with Sicim-Yüksel-Akkord Consortium, works for the TANAP project are scheduled to be finalised by the end of 2017.
CE: How would you characterize the last year for Akkord? What plans for further development do you have?
Göksel Aybek: Last year has become the outcome of the purposeful structural reforms within the Corporation in recent years. The 2016 year has turned to be a significant year in terms of establishing a clear and precise framework strategy for further development.
Obviously, the reforms will be continued, both now and in the future as needed. Using more sophisticated and advanced forms and variations of achievements, we will try to make the most of the attention and care of the country’ top leadership aimed at the development of the oil sector. This is to result in strengthening and development of the Corporation, achieving strong positions of the private sector capable to withstand any challenges of the world market and harsh competitive environment. Growing economic strength of our country, creating new jobs, increased industrial production and export capacity and improving the social well-being is our prime objective. I believe we will manage to properly fulfill the set tasks and achieve even higher goals.
Thank you for the interview
Interview made by Jeyhun Bayramov and Olga Nagiyeva