German companies eager to expand investments in Azerbaijan - AHK

By Trend

Sold out Business Class in Air Carriers and flight connections improving, we see clear indicators of growing interest in the Azerbaijani market, despite the global challenges, Tobias Baumann, Executive Director of German-Azerbaijani Chamber of Commerce (AHK Azerbaijan), told Trend in an exclusive interview.

On the back of the war in Ukraine, the energy prices grow. This is bad news all over, and especially for consumers but on the other side it means good income, and further business development for Azerbaijan, Baumann said.

Meanwhile, according to the executive director, the trade indicators between Azerbaijan and Germany improved significantly over the last year, compared to the coronavirus pandemic year of 2020, with the total trade turnover reaching 1 billion euros.

German exports to Azerbaijan in 2021 reached 300 million euros, while the official number of imports totaled 700 million euros. The indicators of the first quarter of 2022 also look better, he added.

Further speaking, AHK executive said that German companies could offer a wide range of solutions for the reconstruction of Azerbaijan’s Karabakh region starting with local infrastructure, water management, and electricity.

According to the executive director, Germany has different solutions for farming, renewable energy, tunnels construction, and de-mining as well. Germany’s involvement in the de-mining process prepares the ground for future investments, he noted.

“Currently, Germany is involved in several construction projects. We have a German-Azerbaijani joint venture working on airports and roads. Our architects provide solutions for housing construction as well,” Baumann said.

As the executive director explained, there is a huge potential to implement more projects in Karabakh. After first rounds of quick project implementation companies expect tender procedures to normalize. This may lead to further opportunities for German business.

Moreover, a German led consortia of three companies together with their partners plans to invest in a new aluminum plant in Azerbaijan’s Ganja city.

“The overall volume of the investments in the project will amount to 300 million euros. Compared to what we have seen in the last years, this is a big figure,” he noted.

As Baumann explained, the number of German companies working in Azerbaijan is always changing. Germany is engaged in projects in Azerbaijan in various sectors, such as heavy transport, installation, distribution of machinery, and more.

“We do have companies that are permanently based in Azerbaijan as well. Overall, according to our estimates, there are around 200 German companies active in Azerbaijan every year,” he added.

Further speaking, Baumann noted that Azerbaijan is a major oil and gas supplier to Germany.

“German companies are actively involved in Southern Gas Corridor project. Now we have serious complications with our gas partners from Russia, so we are looking for alternative ways to diversify gas supplies,” Baumann said.

Baumann noted that Germany supplies drilling equipment to Azerbaijan for exploration, environmental protection projects’ implementation. German support to Azerbaijani energy sector in this regard also includes assistance to the Oil sector and oil mud separation in waste management.

“German companies supply Azerbaijani partners with equipment for various industries - textile, cattle-breeding, food production. Specialized German engineers also designed the roof for Crystal Palace building in Baku together with Swiss partners,” Baumann said.

Germany would like to call for more energy companies to join AHK Azerbaijan. Currently, the number of the members of the Chamber reached 160, which is a record figure, the executive director said.

“One of our members, Uniper SE, German energy company, is one of the main gas traders. We would like to invite more companies engaged in energy generating, renewable energy, and hydrogen generation, which are the sectors of the future, and the field we plan working on,” he noted.

According to AHK executive, the Chamber already plans on receiving a renewable energy delegation in June 2022. He also noted that the Chamber had a delegation for water waste management and local infrastructure in September 2021, which was quite successful as well.

“We also invite our members of different sectors to come together in working groups. Recently, we launched an energy transition working group and had our first session,” he added.

Summing up, Baumann said that German companies are mostly engaged in projects’ implementation in Azerbaijan’s logistics sector, and transport solutions. Such German companies as DHL, Rhenus Logistics, Hansa Meyer Global, DB Schenker, Kuehne+Nagel, and others are involved in SOCAR’s logistics.

Moreover, according to the executive director, German companies in Azerbaijan are specialized in the field of heavy equipment maintenance.

“For them, Azerbaijan is a market for equipment, consumer goods and specific solutions in the engineering industry. A number of these companies have representative offices in Baku,” added Baumann.

As to date, Azerbaijan has not yet been a major location for German investments. But with the mentioned aluminum project, the development of Karabakh, and new international agreements, this may change in the near future.