Baku metro inflated transportation costs. Will fares decrease?
Baku metro inflated transportation costs
Recently, the Azerbaijani Accounts Chamber reported that Baku Metro had inflated the cost of passenger transportation. Last summer, when metro fares were raised from 40 to 50 gapiks (around $0.29), officials claimed that the actual cost of transporting passengers exceeded the fare. However, despite the audit report’s findings, there are no plans to reduce metro fares. Experts believe that even if the misallocated funds are returned to the budget, a fare reduction is unlikely.
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Azerbaijani Accounts Chamber audits Baku metro
An audit conducted by the Azerbaijani Accounts Chamber at Baku Metro CJSC revealed artificially inflated passenger transportation costs.
According to the Chamber’s report, the audit found that subsidies for passenger transportation were not properly regulated. As a result, excess funds were distributed to employees as individual bonuses without justification. These payments were recorded as deductible expenses, leading to an increase in the cost of passenger transportation services.
Additionally, changes in budget documentation and contracts led to project delays. The audit found that work worth 559,700 manats (approximately $329,000) was carried out without a proper project cost analysis, while 712,900 manats (around $419,000) worth of work did not meet construction standards and regulations.
During the audit period, Baku Metro signed 262 direct contracts totaling 868,600 manats (about $511,000). These contracts were awarded without competitive bidding, the estimated costs were not determined, and the tendering process was bypassed, violating fair competition rules. Furthermore, deficiencies in the tender commission’s operations were identified, long-term receivables accumulated, and penalties were not enforced.
The audit revealed that in some cases, needs were assessed without a realistic evaluation of available resources. This led, on the one hand, to the use of additional state funds, and on the other, to assets remaining unused for extended periods.
Obligations under contracts for financial reporting at Baku Metro CJSC were not fulfilled. This resulted in a lack of full transparency in financial statements and deficiencies in internal control policies and accounting practices.
Following the audit, relevant authorities were given recommendations to restore outstanding receivables of 13,600 manats (approximately $8,000) in financial records, ensure that unauthorized construction and installation work complies with project documentation, and eliminate other identified shortcomings. It was also proposed to take necessary measures to complete ongoing projects.
Expert commentary
The chairman of the Republican Alternative party, economist Natig Jafarli, recalls that several years ago, he had already warned that metro fares would rise and that the justification would be the high cost of passenger transport:
“We are tired of being right, while the government never tires of its incompetence and denial of problems.”
The Accounts Chamber has published an official statement revealing that metro transport costs had been artificially inflated for years, which was used as a pretext for increasing fares. In other words, they were stealing both from the state budget and citizens’ pockets.
“We have been talking about this for over 10 years. In a 2017 interview, I predicted that a decision could be made in the future to raise metro fares. Back then, I said they would justify it by citing high transportation costs. However, none of the leadership could explain why the costs were calculated so high. In reality, an independent audit could be conducted to accurately determine the actual cost of passenger transport in this organization,” I stated at the time.
“Eight years later, the government has been forced to admit it,” Jafarli said.
Economic expert Razi Abasbeyli also points out that the inflated cost of passenger transport is a result of the lack of transparency in the metro system:
“By what criteria does the cost increase? After the purchase of which goods and equipment? After which repairs, restorations, or reconstructions? These questions always remain unanswered. All this information is confidential, and detailed data on how costs have risen are not provided.
The Accounts Chamber audited the Baku Metro, and the inspection revealed cases of wasteful spending and artificially inflated costs. As a result, it became clear that the state had been deceived,”** he told publika.az.
Regarding a possible fare review, the expert stated that it is unlikely:
“I don’t think prices will go down. Such cases are usually identified by organizations that conduct regular audits of budget expenditures at the end of the year, and funds allocated in cases of detected violations are returned to the budget.
One should not expect that this will lead to lower fares. There is simply no such practice.
Unfortunately, such facts are uncovered annually by the Accounts Chamber, discussed in Parliament, and investigated by the Prosecutor General’s Office, but the process continues as usual. In the end, only one mechanism functions—ensuring the stolen funds are returned to the budget. The damage inflicted on citizens is never reimbursed.”
