Speech of the President of the Republic of Azerbaijan Heydar Aliyev in the ceremony of laying the foundation of the new gas-turbine installation at Baku Thermal Power Station No. 1 – August 28, 1999

Ladies and gentlemen!

Dear friends and guests!

I cordially congratulate you on the occasion of laying the foundation of the new-thermal Power Station equipped with modern technology in Baku, Azerbaijan.

It is a remarkable and important event in the socio-economic and public life of Azerbaijan. This event is a bright example of the consistent policy carried out by the government in the sphere of economy and improvement of the welfare of population. Our program is consistently implemented and aimed at developing the power stations, which hold an important place in the economic potential of our country and in expanding its energy capacity. It is an obvious example of the constant care and attention of the state to our citizens and to the improvement of their welfare.

The foundation ceremony today is part of the large-scale program of the Azerbaijani government aimed at developing the economy, improving the welfare of population, solving social problems, closely cooperating with world countries, attracting foreign investment, opening Azerbaijan to foreign investment.

We regularly implement this program and expand our cooperation with the economically developed countries and companies with high technology.

Detailed information was provided on indicators of the power station. We managed to secure the construction of this station thanks to our cooperation with the Swiss company ABB and a German bank and respective countries.

Such important actions made by Azerbaijan in the period of transition and economic challenges display once again our will to establish free market economy and cooperate with all the countries of the world.

As it was already informed, the investment worth of 55 million dollars will be made for the construction and completion of the first block of the power station. We realize this project thanks to the loan and feasibility proposals provided jointly by ABB and the German bank.

Muslum Imanov informed comprehensively about the power plant. I think that the funds invested in this project will produce effective results for the development of our economy and improvement of the socio-economic status of the population. That`s why, we have taken this step so confidently and we are going to implement it.

The vice-president of ABB announced that the project would be completed by the October of 2000; it makes me very happy. August 1999 is coming to an end, and in the October of 2000 our country will be provided with electricity by the new power station equipped with modern technology and having great economic potentials. It will contribute to the electricity supply to our population and to the oil refinery plant here, as well as to the development of electric power capacity of Azerbaijan.

I start thinking when I look around today. The thermal power center, which has been serving us so far and called TEC-1 in Azerbaijan is a steam power plant. According to the data available, the plant was built in 1902. It was modernized several times later in 1920, 1950, 1970. This plant has been serving us for almost a century. The exploitation of this plant for a century is an example of the economic relations of Azerbaijan with foreign countries in the past, as well as the importance of generation and supply of electricity in our country.

The power plant has made great service. That is why, I thank all the employees and experts, who have been working here for decades.

I recall that we consistently implemented the program of industrial modernization of Azerbaijan in the 1970s. This place we are standing in now is part of Baku once called Garasheher (Dark City). Modern enterprises were established here during the oil boom in the 19th century and in the beginning of the 20th century. The majority of those enterprises were founded by the European and Azerbaijani businessmen interested in the Azerbaijani oil. Later those people made exceptional services to Azerbaijan.

The industrial enterprises founded then possessed the appropriate level of technology. While know-how and technology changed over time, operating industrial enterprises and power plants here harmed our economy. More terrible was their harm to the environment of Baku.

That is why, this part of Baku was named Garasheher (Dark City) in the beginning of the century. Now the youth is unaware of it. But we recall that Garasheher was indeed dark.

I was too young when I first arrived in Baku in 1938. I was eager to explore Baku. There was a park constructed by the Nobel Brothers and named after Nizami in Garasheher. I was told that it was a beautiful place. I used a tram to get here. I remember that I had lost all my patience until I reached Garasheher. As a person not used to such conditions, I could not resist the smell and impact of different kinds of chemicals.

This is my impressions of that period. Having confirmed and announced obsoleteness of the plants, factories and other manufacturing facilities in Garashsher during my tenure in Azerbaijan, we prepared the modernization program and implemented it into life in the 1970s.

In my detailed speech on this program in the early 1970s, I declared that Garasheher would be more beautiful and have nice buildings. I am happy that I announced it and the program I started to implement 25 years ago have produced effective results. Almost no manufacturing facilities and plants contaminated the air of the city is left here. We`ll remove anything that is still left. One of the old enterprises, the power station No. 1 was called by the population TEC-1. It is 100 years old now. And we bid farewell to it. A modern, environmentally friendly power station with higher technology, better economic efficiency and more capacity is to be built in this place.

Our present ceremony is dedicated to the development of the Azerbaijani economy, including the development of the energy sector, which is a key sphere of our economy.

As a result of our economic reforms in the 1970s, Azerbaijan managed to construct and exploit power stations in order to become self-sufficient within the Soviet Union. I can state with a great pride that it is one of the biggest achievements of Azerbaijan in the 20th century. It is not accidental that unlike other post-Soviet countries Azerbaijan possesses energy potential that meets the demands of the entire country, including the industry, production, population since Azerbaijan gained its independence and tore with the common energy system of the former USSR; we have secured this potential.

It was not an easy job. We did a lot, which was not easy, because it was necessary to receive huge funds from the state budget of the Soviet Union for the construction of a new power plant. Those funds were not allocated every time. We were questioned what we wanted to build new power stations for. We were told that we could get d electricity from the common energy system of the Soviet Union. Yet we looked forward. We considered that Azerbaijan must secure its energy independence. And we did it. 

On the other hand, construction and installation of power stations was still an uneasy job even after allocation of funds. Had we not speeded up those processes and not been engaged in them seriously, the huge power plants would not have been built and we would not have owned such an important property now. In other words, we took actions in this direction.

All these are the heritage of the past. We can be proud that Azerbaijan has the right to live independently when we gained our independence. One of the pillars of this independence was independent energy system and potentials of Azerbaijan.

We could have lost all our achievements had this sphere not been developed. But we developed it. Undoubtedly, the industry of Azerbaijan faces huge difficulties. We carry out economic reforms, which, as you know, create great problems. Azerbaijan`s state budget is not able to establish large enterprises, including power stations. But we have found the way out. We closely cooperate with the prominent banks and companies of the world in the energy sector like in other fields.

You were informed on these projects here. I am proud to have founded the Shamkir Hydroelectric Station on the Kura River. Now it serves Azerbaijan.

I am proud to have prepared a comprehensive program on the development of the energy system in Azerbaijan. A large portion of the program was the establishment of Yenikand Hydroelectric Station. In the 1970s, we prepared and approved the draft of Yenikand Hydroelectric Station to be installed upon the Kura. We were to start its construction after Shamkir Hydroelectric Station. Unfortunately, the project delayed in the late 1980s. After the collapse of the Soviet Union, no one took care of this project.

Muslim Imanov reminded absolutely correctly that some people stole and sold power lines instead of modernization, development and renovation of power stations. I witnessed it both in Nakhchivan and in other parts of Azerbaijan. There was no electricity in Nakhchivan. The autonomous republic had no electricity supply in the period of the blockade. Some people cut the wires at nights and sold them abroad when there was confusion, chaos and anarchy in Azerbaijan. I witnessed it in Nakhchivan. But such cases happened not only in Nakhchivan, but also in other parts of Azerbaijan.

When I returned to Baku and started my work in 1993, I was told about such cases in 1993-1994. Why did such events occur? They happened because the political situation in Azerbaijan was unstable, internal chaos and anarchy that broke out in 1988-1989 were continuing, and it was hard to prevent them. 

But we stopped them. First, we stabilized the socio-political situation in Azerbaijan. Second, we focused on these spheres. We explained to people living in financial difficulties that cutting the wires would leave them with no electricity at all. They understood. On the one hand, strengthening the discipline, maintaining socio-political stability, on the other hand, the transformation of the mind of the people in favor of their country led to a normal situation.

But it was not enough. We needed to develop the energy system of Azerbaijan. Therefore, first of all, we carried out researches on the construction of Yenikand Hydroelectric Station. During my official visit to the United Kingdom in 1994, I conducted negotiations with the European Bank for Reconstruction and Development and later with the World Bank. Having received a 100 million loan as a result of negotiations, we launched the construction of Yenikand Hydroelectric Station. The construction is under way. Mistakes were made in some cases, which we criticized. Therefore, Muslim Imanov reports here today that all the mistakes have been corrected. But it would be better to work flawlessly so no need to punish you arises. The process of changing the direction of the flow of the Kura River will be conducted in a few days in order to launch the second phase of construction of the power station. This is a great achievement for us.

The Northern Power Station was also mentioned here. This is an old power station. If I am not mistaken, its equipment was brought from Germany as part of the reparations after the World War II and installed here. Undoubtedly, this station made great service to us. But it does not meet the present demands and generate as much electricity as we need. It is out of date and needs modernization. We need to replace it with a new, modern power plant.

We have done a lot of work and conducted researches for it. We managed to summarize some of our work during my official visit to Japan. The Japanese government decided to provide us with a very favorable 320 million dollars loan consisting of two parts for 40 years. The relevant project being prepared will soon be launched. I want to say that it will be a great event in the development of our energy potential and an important step in the establishment of modern technology in Azerbaijan. Of course, it will also have an effect on the improvement of the environment of Baku, Azerbaijan.

Or take Mingachevir Hydroelectric Station. It was put into operation in 1954-1955, it has served Azerbaijan greatly. I remember that we all considered it the construction of the century when it was still under construction. Then it was of great importance for Azerbaijan indeed to receive energy from the Kura.

But it now makes up 7% of the power potential of Azerbaijan. Shamkir Hydroelectric Station has a larger capacity. Now we are dealing with the issues on the modernization of Mingachevir Hydroelectric Station in order to increase its capacity. We need to get a $50 million loan for it.

So you see how much we have done within a short period of time for the development of a sector of socio-economic importance for Azerbaijan. We are going to invest $500 million in the construction. These investments will increase the energy potential of Azerbaijan and make it more effective.

It was announced here that the investments made in the construction of power stations in Azerbaijan in those years totaled $2.5 billion in today`s prices. We have managed to realize those projects by effectively using huge resources of the Soviet Union. It is not an easy job to make an investment worth of $500 million in the energy system while facing hard problems during independence. We have managed it and will continue our activities. Power plants will be built and modernize the life in Azerbaijan.

I asked what company will carry out the construction of the power station here. Of course, technology and other equipment will be provided by ABB, the German bank, and their experts. But 90% of the working staff to be involved in the construction and installation will be made up by the Azerbaijani specialists and workers. It means that we create new jobs, give people wages and improve their welfare.

Sometimes most people do not see that side. As I said, we have invested $500 million in electric power system. We create great opportunities for Azerbaijani citizens to work, earn money and improve their well-being. This is the social aspect of the process. Another aspect is the supply of cheap, affordable electricity.

We do our job, make investments and will reach our goal. However, the issue of efficient use of electricity is not at the appropriate level. There are a lot of flaws, shortcomings. Azerenergy company is a large agency headed by Muslim Imanov. I appreciate the work done in this sphere. Obviously, it is carried out by our government, not only by Azerenergy. Azerenergy Joint-Stock Company is actively involved in this work. However, the issues on the efficient use of electricity and return the invested credit are not in good conditions.

As you know, the power stations we created in the past supplied plants, factories and all the manufacturing facilities with electricity. However, the price was very cheap. Citizens were also supplied electricity on a cheap price. The state took over all of them. But now we are building the market economy. All the investments must be returned. If we produce electricity, supply it to manufacturers and citizens, and do not profit, then everything will collapse.

We invest $500 million in this sphere. We must ensure the return of the investment, pay loans back and improve the welfare of our population. This is a simple scheme. Unfortunately, most people have old thinking and believe they will get electricity free of charge. They use electricity for different purposes, but either pay little or nothing for the used electricity. How much can you collect?

Muslum Imanov: 12%.

Heydar Aliyev: 12%! Can you imagine? It means, only 12% of cash electricity payments is collected.

Muslum Imanov: It reaches 50% with other payment.

Heydar Aliyev: All right. And where is the rest 50%? Who will pay? I do not have any other funds as President. I repeat that we are having market economy. I have criticized you several times and I do it now. Your work in this sphere is not satisfactory.

Using this opportunity I appeal to all the citizens of Azerbaijan, to businessmen in the private sector, industry and other sectors. Please, understand the realities. 12%. How much do you collect from the private sector?

Muslum Imanov: Mr. President, 80-90%.

Heydar Aliyev: Who else serves?

Muslum Imanov: Baku.

Heydar Aliyev: How much do they collect?

Muslum Imanov: According to the information I received, it is 80-90%.

Heydar Aliyev: Is it true?

Artur Rasizade: Maximum 50%.

Heydar Aliyev: 50%!

Muslum Imanov: It is the information they provided to us.

Heydar Aliyev: What information? We are to have the truth. Information can be available on paper. But funds, payments must enter the budget. It is not going to work if those funds do not go to budget, no matter what you have on paper! So I demand you to work properly. Do you understand? Work properly. You must understand that no one else is going to give us those payments in order pay our loans back.

Muslum Imanov: All remarks are correct. Yes, there are some difficulties and social problems in the energy system. And we are going to resolve them.

Heydar Aliyev: You have given such explanations many times. But it is a national problem. Every citizen must contribute to developing and strengthening Azerbaijan. Every citizen must understand that we create new conditions, new economic system. I believe that we shall achieve great successes, the Azerbaijani economy will develop, the welfare will be improved. We do our best for it.

But every citizen must think so and do his best. Then we shall achieve the results we desire. Dear friends, dear citizens, you should understand that otherwise we shalll face big difficulties. Those difficulties will later fall on you as a burden. If the problems arise, you will not be able to get income and improve your welfare which you and we want. These processes are closely interconnected. You should understand them. Therefore, I address to all our citizens: first, let`s use electricity that belongs to all us efficiently and economically. Secondly, anyone who uses electricity must pay for it. It will be fair.

You are aware that we have been carrying out large-scale projects in our oil sector for five years by attracting foreign investments; these projects produce effective results. Our first oil agreement called the Contract of the Century will be five years old on September 20. We are going to celebrate it as a historic event for Azerbaijan in the 20th century. It was a turning point. The foreign investments have been flowing to oil and non-oil sectors of Azerbaijan since that Contract.

We have prepared an important program for the solution of our problems in the oil and gas sector. We have signed 19 contracts so far. We have obtained results also from the second agreement that encompasses Shah Deniz deposit. Huge gas reserves have been discovered there. I issued an order on the preparation of proposals on the ways and actions for exporting the Azerbaijani gas to world market. In other words, this process is under way now.

Simultaneously, we manage to invest in and develop other sectors of the Azerbaijani economy by attracting foreign investments, promoting enterpreneurship, conductions privatization and other reforms.

Some people do not want to see the achievements of our oil sector. Those evil-wishers feel jelaous of our successes. They must be blind if they do not see our successes.

We have other sectors, such as the construction. Each of them has its own importance. Once invested, the oil and gas sector produces great results. Urban infrastructure and other sectors also receive foreign investments, even though their volume is not so great. Thus, their results are not great either. But it is necessary and we do it.

We have developed a completely correct, thorough economic policy. First of all, we manage to attract foreign policy by connecting this sector with the world economy and develop it. This sector is associated with all the sectors of the domestic economy. A number of industrial enterprises, including shipyards, machine-building plants in Azerbaijan have received orders, operate and benefit thanks to the implementation of oil contracts.

The second largest sector is the energy sector. It is an indispensable sector. People, country cannot survive without electricity. We have invested $500 million in this sector. This is a striking result of our activities. The power station, of which we have laid the foundation, is another bright demonstration of our job. Our activities, including this power station, are a neat reply to the people, who are jealous of our successes. This is a great strike and they will never be able to recover.

I feel a great joy. The energy sector to which I have dedicated 30 years of my life, is taking a new step in the development of Azerbaijan, and I feel proud of it. I am confident that we shall fulfill all these programs. I believe that our collaboration with ABB, Switzerland, the German bank will yield results within a short time. As it was noted here, we shall consider the proposals on the second turbine. We shall accept the proposals if there will be beneficial conditions for our people.

Even such a small business demonstrates our good cooperation with the European countries. It also encourages investments in other spheres in Azerbaijan. Foreign investments and loans are provided to reliable countries with internal socio-political stability. If the German bank gives us a credit, it believes in its profit. If ABB cooperates with us, they believe our job will be successfully finished.

What is the ground for this? It is based on the socio-political stability, the correct economic and foreign policy of Azerbaijan. It is based on political and economic reforms carried out here. It is based on the process of a democratic, legal, secular state-building. Therefore, developed countries and big companies are attracted to come to and invest in Azerbaijan, to believe in and cooperate with us. We sought for investments of big companies. They were also interested in the cooperation with us. The difference lies in the fact that we need them, but they do not need us. But when they learn that they can trust us and enjoy favorable conditions, they come to Azerbaijan with confidence. I believe that the people and state of Azerbaijan will further justify this trust.

Dear friends! I congratulate you on the occasion of this remarkable event. I express my respect to all the people working in the industry and energy sector, wish you health, happiness and successes. Thank you.

“Azerbaycan”, August 29, 1999