Page 76 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.73, # 1, 2016, pp. 64-77

environmental protection and the rational utilisation of natural resources. In support
of Azerbaijan‘s environmental protection goals, a number of important laws, legal
documents and state programmes have been developed and approved in order to
improve the ecological situation in the country.
There are two gross indicators of progress. First, the reliability of power
supplies has improved, leading to a flow of funds to the power sector in Azerbaijan.
Second, a 90% collection rate of the electricity bills has been achieved. This
happened after many years of significant problems, when transmission and
distribution companies were unable to collect bills and consequently had insufficient
funds to pay for the generated electricity. The three priority areas for development in
the energy sector of Azerbaijan are identified as follows: rehabilitation of power grid
for improvement of power supply quality and loss reduction; development of
renewable energy; improvement of demand-side EE and energy conservation‘.
The main objective of the Azerbaijani Government in the field of energy has
been to become self-sufficient in terms of meeting the energy demand. This
objective has been achieved for oil since 1998 and for gas since 2007. Moreover, in
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addition to committed exports, there is currently an overcapacity of 6 billion m of
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gas that could be exported to Europe and this is expected to increase to 10 billion m
by 2017. According to Action Plan 2011–2015 approved by the President for the
implementation of the State Programme on Poverty Reduction and Sustainable
Development 2008–2015 the country will begin privatisation of enterprises in the
fuel and energy sector. The institutional arrangements for EE are at early stage of
development in Azerbaijan. Institutional development should be informed by an
understanding of the short, medium and long-term tasks to be accomplished and to
which the authorities need to give early and high-level consideration. The European
Bank for Reconstruction and Development (EBRD) has supported the preparation of
a €165 million investment programme to modernise and upgrade AzDRES TPP (the
country‘s largest thermal power plant (TPP)). This project has also applied for
carbon credits under the clean development mechanism (CDM) and is expected to
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reduce CO emissions by 3 million tons CO eq. annually.
Nevertheless, the output of gas fired power plants could be considerably
reduced, by developing this RES potential, which could make the GDP growth,
which is currently mainly driven by oil and gas exports, more sustainable and long
lasting. International donors, the EU and the Energy Charter are strongly supportive
of Azerbaijan in terms of its EE efforts; with a view to complying with concluded
agreements the administration should take a more explicit and structured approach to
capturing the benefits of EE for all.

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