Privatization

Under the Privatization Law, the following are considered to be foreign investors:

* Foreign legal entities and their subsidiaries;

* Azerbaijani legal entities in which foreign investment exceeds 50% of the entity's charter capital;

* Foreign nationals and

* Stateless persons.

To date, Azerbaijan has undergone a long process of transition from a state-dominated economy to the current situation where 81.7% of the economy is held in private hands. This became possible largely thanks to the denationalization of state-owned enterprises and property. Privatization occurred in two stages. The denationalization of small enterprises was carried out within the First Stage Privatization Program (1995-1998). Thirty-nine thousand enterprises, as well as 1.3 million hectares of land, were sold and distributed to private persons and legal entities, more than 1,550 medium and large enterprises were transformed into joint-stock companies. A few large enterprises were also sold to investors as part of the Program. They include, inter alia, a brewery, and cement and steel plants transferred to foreign investors. In general, the amount of revenues from privatization in 1998-2011 was AZN 560 million (more than USD 700 million). More than 500,000 jobs were created as a result of privatization. 

The Second Stage Privatization Program adopted in 2000 is still underway and covers more strategic and broader sectors of the economy such as transport, communications, construction, the chemical and heavy engineering industries, metallurgy, etc. It stipulates the privatization of mainly medium and large enterprises.

Enterprises are declared "open for privatization" by special Decrees signed by the President. The list of enterprises currently open for privatization is available to the public.

The law also contains a list of exemptions, i.e. enterprises that cannot be denationalized. Such enterprises include military and other facilities of strategic importance. Railways, radio and TV stations, and irrigation systems are excluded from the privatization as well.

The programs explicitly do not place any restrictions on who may participate in privatization, i.e. foreign nationals can take part in the process on a non-discriminatory basis. 

The State Committee on the Management of State Property is in charge of the privatization process. There are a few legally adopted privatization methods in Azerbaijan, inter alia: 

* direct sale to a strategic investor;

* sale at an investment tender;

* special cash and voucher auctions;

* general auctions;

* sale to employees on preferential terms.

The Government also practices the long-term transfer of management to a private operator in accordance with an obligatory investment program. Presently, the number of medium and large enterprises privatized under both Privatization Programs is over one thousand. There are, however, still very substantial opportunities for privatization as a way to enter the market.

At present, the privatization process plays a significant role in the development of the economy. A number of measures, such as the involvement of consulting companies, independent experts and valuators, educational and promotional works and the organization of different events with the participation of local and foreign investors have been implemented by the State Committee on Management of State Property to improve the privatization process.

Besides this, the www.stateproperty.gov.az and www.e-emdk.gov.az websites provide comprehensive information about enterprises open for privatization, investment projects in different sectors of economy and the current situation regarding privatization of state property.