Tatar chemistry in Azerbaijan: why they building an industrial site in South Caucasus

A 10-hectare park for Russian businesses

Khimgrad JSC in Tatarstan will act as a partner of the Russian-Azerbaijani industrial zone, which is going to be built by the Agency for the Development of Economic Zones under the Ministry of Economy of Azerbaijan. The corresponding agreement was signed by the director generral of the Kazan technopolis Khimgrad, Airat Gizzatullin, and the chairman of the board of the Azerbaijani agency, Seymour Adygezalov. The memorandum of cooperation was signed within the framework of the XV Russia — Islamic World: KazanForum 2024 International Economic Forum, the technopolis press service told Realnoe Vremya.

The agreement stipulates that the future industrial park for Russian residents will be located on a vacant plot of 10 hectares on the territory of the Sumgayit Chemical Park, 35 km from Baku. The Azerbaijani side fully assumes the construction costs.

As it follows from the document, the Agency for the Development of Economic Zones under the Ministry of Economy of Azerbaijan should provide financing for the construction of engineering and transport infrastructure of this site, as well as the construction of industrial buildings.

Park will be adapted to the requirements of businesses

Kazan Technopolis, in turn, will act as a consulting partner in determining the configuration and placement of the main elements of the park's infrastructure.

“Khimgrad is ready to invest 20 years of experience in creating innovative industrial sites in a joint project," Technopolis explained and added that the management company is ready to share technologies for the internal structure of the industrial park in order to adapt working conditions to the requirements of Russian residents.

“The companies are used to a certain standard of service, so the task of the management company is to create a good service," Airat Gizzatullin, the head of Khimgrad, argued earlier. According to him, the logistics location and high-quality engineering infrastructure are important.

But the Tatarstan company itself is not going to invest in the project or participate in its direct management. “We will not invest our own funds," Khimgrad stressed, apparently wanting to clarify the “balance of power” of the international industrial project, as the Azerbaijani media dubbed it as a partner in the future joint venture site management.

Another important obligation of the Agency for the Development of Economic Zones under the Ministry of Economy of Azerbaijan is to provide a package of tax benefits and preferences comparable to Russian conditions.

“The key task is not only to create facilities for the placement of production facilities, but also to create favourable conditions for the localisation of production in Azerbaijan — so that Russian companies can work in a new environment in familiar conditions in which they successfully develop here in Russia," they explained in technopolis, adding that so far the mechanism of benefits has not been defined.

Most likely, Khimgrad will also have to assist in attracting Russian residents. At least, the Azerbaijani press claims that the future joint venture will be the operator of the industrial site located on the territory of the Sumgayit Chemical Industrial Park, and the main task of the company will be to actively attract Russian and Uzbek entrepreneurs to create production enterprises in this industrial park.

$4 billion invested in Sumgayit Park

The future industrial park is designed for polymer processing, so it was decided to localise it within the boundaries of the Sumgayit Chemical Park. Enterprises for the production of petrochemical, chemical products, and building materials operate on its territory. Among them — factories for the production of glass, packaging materials, and even the assembly of trucks has been opened. About 60 residents work in the park, investments in projects exceed $4 billion. Over 10,000 jobs have been created. In other words, there is a “big workshop” in Central Asia. The input threshold does not appear in open sources.

The economic prosperity of the Sumgayit Chemical Park was ensured by the export of products. According to the management of the site, almost 30% of the products produced are shipped abroad through the Caspian Sea, which is part of the international North-South transport corridor. The products produced in the industrial park are supplied to Turkey, Japan, the USA, Canada, Italy, and China. A year ago, discussions began here on the construction of a logistics centre. Tatarstan authorities held the first talks with the leadership of the Sumgayit Industrial Park in November 2022. Two years later, it was decided to create an infrastructure for Russian business.

Russian business participates in the implementation of projects on the territory of special economic zones in the CIS countries, but so far reluctantly. For example, the Chirchik and Jizzakh technoparks were built in Uzbekistan, created with the consulting support of Tatarstan residents, but only nine resident enterprises operate in them. For example, Chirchik occupied 29 hectares, and Jizzakh occupied 13 hectares. But on the other hand, 30% of the products produced are steadily exported, the head of technopolis recently said.

Ministry of Industry and Trade: industrial parks should be built along the North-South corridor

The leadership of the Ministry of Industry and Trade of Russia intends to promote the expansion of exports. During a panel session at KazanForum, First Deputy Minister of Industry and Trade Vasily Osmakov said that the authorities intend to subsidise the construction of industrial parks along the North-South ITC.

“Our second task is to support the creation of industrial parks along these routes. Port infrastructure, warehouses — this has never been done before. We are starting the work now. Starting this year, Russian management companies are becoming agents. There is such an experience in Uzbekistan," he said, without naming specific deadlines for projects.

Building new logistics routes from St. Petersburg to Mumbai (India) is a priority task. According to him, in 2 years there has been a radical reorientation of export flows to new markets. Two tools are launched for this purpose. The first is subsidising the costs of operators who work along transport corridors in Latin America and Africa, the North-South. The programme is to be launched this year. The trade turnover is expected to reach $162 billion by 2030.

The second tool is support for the creation of industrial parks along these routes. According to the report of the Eurasian Development Bank (EDB) “Infrastructure of Eurasia: short- and medium-term trends, in 2023, out of the total volume of international freight traffic, which amounted to more than 650 million tons, 3%, or 19 million tons, fell on the North-South ITC. At the same time, freight traffic along the ITC increased by 38% last year. In 2023, this international corridor took a special place in the new configuration of Eurasian transport routes. Russian Presidential Aide Igor Levitin named Azerbaijan, Iran, Turkmenistan, Kazakhstan and Uzbekistan as priorities in the North-South ITC project.

“The Caspian Sea is the main point of attraction for Russian polymer processors," experts say. “Due to the expansion of transport routes through Azerbaijan, a path opens up both to Turkey and in the direction of China.”

It is expected that the industrial site in Azerbaijan, with the consulting support of the Tatarstan side, will be built in 2025-2026.