Q&A Khagani Guluzade - Chairman of Akkord Industry Construction Investment Corporation
The Report Company: What contribution has Akkord made to the development of the local construction market and to the non-oil sector in general?
Khagani Guluzade: Akkord is strongly committed to contributing to the development of the local construction market and the non-oil sector of Azerbaijan’s economy. Within a short period of time, the company has become a national leader in the construction sector. We are currently involved in large-scale infrastructure projects with a total contract value of around US$2 billion. To date, the corporation has completed infrastructure projects with a total contract value of more than US$1.7 billion in Azerbaijan and abroad.
In addition, we have been continuously developing two other lines of our core business: the construction of real estate and public facilities, and the production and processing of construction materials. As an important construction materials supplier, we provide cement, concrete and concrete pre-casts, asphalt, gravel, sand, bricks, marble, granite and fabricated metal products for both our own needs and for the wider market in Azerbaijan. We also recently finalised the installation of the first production line at our brand new cement plant in the Gazakh region of Azerbaijan. We own and operate 40 plants of various types throughout the country.
Regarding real estate development, the corporation has constructed and commissioned 10 housing estates covering a residential area of more than 775,000 square metres, and more than 56,000 square metres of commercial space in Baku.
One of our most recent business directions is the construction of water supply and sewerage infrastructure systems in Azerbaijan. We are currently implementing 11 such projects in six regions of the country, with a total contract value of almost US$400 million. As a public interest entity, Akkord acted as a strong supporter of the state program for the social and economic development of Azerbaijan Republic’s regions for 2009-2013, and generally as an enhancer of the nation’s export potential.
Through heavy investments into industry and manufacturing, the introduction of new technologies and know-how, and the creation of new workplaces, Akkord Corporation makes a substantial contribution to the development of the non-oil sector.
TRC: Akkord is involved in many projects in Azerbaijan. What are some of the major domestic projects?
KG: In collaboration with our French partner, Bouygues, we have established a joint venture to participate in the expansion of the Baku metro. On 7th November 2012 Akkord-Bouygues JV signed an MoU with the Baku Metro Authority to reconstruct the 28th May Station. We are on the verge of signing the respective contracts. The development plan for the metro envisages the construction of more than 50 metro stations and 165 km of tunnels in the next 20 years.
Another project is the Gazakh Cement Plant in western Azerbaijan, which was opened by President Ilham Aliyev in July this year. The feasibility study of the plant was done by Deloitte and Touche, while the project development was carried out by CBMI, a subsidiary of Chinese company Sinoma. The plant, which has a prospective production capacity of 3 million tons of cement per year, will enable us to meet 75 percent of the growing domestic cement demand. The first production line, which has an annual production capacity of 1 million tons of cement, was commissioned in mid-2013. The second line will enable us to produce an additional 2 million tons of cement per year using a dry cement production method. The automatic plant control system was programmed by experts from Siemens and equipped with the most advanced technology. The majority of the plant personnel – some 700 people - will be recruited locally, and therefore the implementation of this project plays an important role in the socioeconomic development of both the western region of Azerbaijan and the country as a whole.
Another essential project is a road tunnel complex at Galaba Square in Baku, which was opened by President Ilham Aliyev in September 2013. This project was designed by Surbana International Consultants of Singapore, while the architectural design was developed by Venezia Design of Italy. This road tunnel complex consists of six tunnels, eight pedestrian crossings and two new exits at the Ganjlik metro station. So far, it is the largest road tunnel infrastructure project in Baku.
TRC: What is the geography and scope of Akkord Corporation’s activities abroad?
KG: We are currently active in several foreign markets including Turkey, Georgia, Kazakhstan, Uzbekistan and Ukraine. In addition, in 2012 the corporation opened a representative office in Frankfurt, Germany. Our current portfolio of ongoing road infrastructure projects in foreign countries amounts to US$1.1 billion.
In Uzbekistan we are a contractor for the M39 Tashkent-Termez Road reconstruction project, in Kazakhstan we are working on the construction of the Western Europe-Western China International Transit Corridor in the Kyzylorda region, in Georgia we are working on the New Kutaisi Bypass, in Ukraine we are reconstructing the Kiev-Chop Road and in Turkey we are now working on the Tuncbilek BY-K2 Panosu 36 million m3 Dekapaj project. These are only some of the projects implemented by our corporation in these countries.
We have established solid and lasting partnership relations with a number of foreign companies in France, Italy, Germany as well as China.
Obviously, this international exposure strengthens our expertise and intensifies our business contacts with foreign partners. We give priority to those projects funded by international financial institutions such as the World Bank, the European Bank for Reconstruction and Development (EBRD), the Asian Development Bank (ADB), and the Islamic Development Bank (IDB). We are also researching the Russian construction market in order to bid for prospective infrastructure projects. In every foreign country, Akkord Corporation and its activities represent Azerbaijan and its people. Therefore, we always deliver the best services and best products wherever we work.
TRC: What have been the main corporate achievements of Akkord Corporation in the past two years? What are your future plans and goals?
KG: We have managed to establish a good team of professionals who are dedicated to their work. We have invested heavily in human capital and implemented a well-integrated corporate governance system to add value to our business. We have also diversified our financing sources to improve financial stability. In 2012, the corporation’s charter capital was increased to US$107.6 million. We improved our financial reporting standards based on IFRS and contracted Deloitte & Touche as external corporate auditors.
In 2013, we are renewing our corporate rating and relaunching our Eurobond project to gain access to low-cost international financial markets. In parallel, we are continuing to bid for new projects domestically and internationally.
In April 2013, Akkord Corporation was awarded Best Enterprise in the Field of Construction in South Caucasus and Central Asia at the Institute of Directors by the Europe Business Assembly in London, while in mid 2013mid-2013, the company became a corporate affiliate member of the International Tunnelling and Underground Space Association (ITA-AITES) and World Road Association (PIARC). Our aim is to expand beyond Azerbaijan and become an internationally competitive transnational corporation.
TRC: How would you evaluate Azerbaijan’s economic development and competitiveness level in the international market?
KG: Azerbaijan’s economic successes are considerable. In the World Economic Forum’s Global Competitiveness Index this year Azerbaijan rose by numerous positions to rank 39th among 144 countries. This means that Azerbaijan is among the 50 most competitive economies in the world. The economic strategy implemented by the president precluded negative impacts of the global financial crisis and ensured steady economic growth. The economy’s high growth rates and clear and consistent government investment programs as well as the diversification of the economy and continuous support to the development of the non-oil sector will ensure long-lasting economic and social benefits to Azerbaijan and its people.