The company is trying to shift the burden of its debts on to the state, while passing it off as merely a restructuring procedure
International analysts assume that Azerbaijani Railway (AR) may be preparing for a bankruptcy process, as well as for negotiations on possible refinancing of certain existing liabilities, similarly to the case of the International Bank of Azerbaijan.
About a week ago, Azerbaijan Railway announced a vacancy for international financial issues adviser. As was pointed out in the announcement, the role of the appointed adviser would be to explore options available to AR for the financing of its future capital expenditures.
Natiq Jafarli, an expert in economics, commented on the aforesaid announcement as follows: “The point is that Azerbaijan Railway is going to drag out the debt repayment period, to ‘restructure’ them, that is, to cast that burden on the government’s shoulders.” Jafarly warned that some other state-run companies, like SOCAR, Azerbaijan Airlines, AzerEnerji and AzerSu (AzerWater) are likely to share the same fate. “Their total debt ranges between USD 13-14 billion, which is even more than Azerbaijan’s national debt,” said Jafarli.
Meanwhile, AR has been trying to attract funding for new projects.
It was reported on 29 June that the French Development Agency (Agence française de développement, AFD) would provide a loan worth EUR 112.5 million to the Azerbaijan Railways. “The loan will be used to build two locomotive depots in Azerbaijan,” the Interfax-Azerbaijan news agency reported, citing an anonymous source in the country’s government.
Jafarli thinks the money will go to cover some of the most urgent debts, and after that the company will embark on the bankruptcy procedure