This report evaluates the corporate governance framework of Azerbaijan Investment Holding (AIH) and its portfolio companies relative to the 2015 edition of the OECD Guidelines on Corporate Governance of State-Owned Enterprises (the “SOE Guidelines”). It was prepared at the request of AIH to support its objective of strengthening its ownership and governance framework for the portfolio companies under its oversight. The project is co-financed by AIH and the World Bank. The World Bank financing is provided under the Azerbaijan Rapid Technical Assistance Facility programme, financed by the European Union.
Since their inception in 2005, the SOE Guidelines have provided concrete advice to countries on how to effectively manage their responsibilities as enterprise owners, thus helping to make state-owned enterprises (SOE) more competitive, efficient and transparent. They complement and are compatible with the G20/OECD Principles of Corporate Governance and the OECD Anti-Corruption and Integrity Guidelines for State-Owned Enterprises.
The project was officially launched in the second quarter of 2023. On the basis of a series of questionnaires shared by the OECD Secretariat, information and relevant data were received from the Azerbaijani authorities. Further information was obtained by the OECD Secretariat during fact-finding missions in Baku, in October 2023 and January-February 2024, and through dialogue with AIH and Azerbaijani authorities.
A draft version of the report was discussed by the OECD Working Party on State Ownership and Privatisation Practices, the body responsible for overseeing the effective implementation of the SOE Guidelines, at its meetings in November 2023 and March 2024.
The report is structured into four main chapters. Chapter 1 offers information on the country context and the landscape in which AIH operates. It starts with background information on the economic and political system in the country, then describes Azerbaijan’s SOE landscape, the legal and institutional framework and ownership arrangements for SOEs. Chapter 2 provides an in-depth overview of AIH portfolio companies. Chapter 3 assesses AIH and its portfolio companies’ alignment with the SOE Guidelines. Chapter 4 concludes and provides recommendations to improve the corporate governance framework applicable to AIH and its portfolio companies.
The report was drafted by Talisa zur Hausen and Gijs van Verschuer from the Capital Markets and Financial Institutions Division of the OECD, under the supervision of Sara Sultan, Head of the State-Owned Enterprise Unit. Karoline Irmscher from the OECD, and Agil Abdullaev and Samir Aliyev (OECD local consultants) provided important research contributions. The World Bank team, including Andzs Ubelis, Salamat Kussainova and Nadir Ramazanov, supported the preparation of the report, in particular by providing contributions to sections 1.1 and 1.2. An informal taskforce comprised of Dutch and United States Delegates to the Working Party on State Ownership and Privatisation Practices provided inputs to the report. Greta Gabbarini and Liv Gudmundson from the OECD provided editorial support and prepared the report for publication.