Economic activity in the liberated territories is supported through ABDF’s financing mechanisms
Restoring the economy and ensuring sustainable development in the liberated territories have been identified as key priorities of the Azerbaijan Business Development Fund (ABDF), operating under the Ministry of Economy. The Fund provides comprehensive support through three main financing mechanisms—direct investment, guarantees and subsidies, and concessional loans—to increase economic activity, foster the establishment of new businesses, and expand existing initiatives in these territories. These mechanisms are designed to contribute both to the development of the real sector and to increased employment in the region.
Investment projects implemented in the liberated territories are of strategic importance for unlocking the region’s economic potential and developing its industrial and energy infrastructure. Alongside expanding domestic production and export opportunities, these projects directly support the creation of new jobs and the development of a sustainable economic environment.
Kalbajar–Lachin Hydroelectric Power Plants
Under the Joint Participation Agreement signed between ABDF and Türkiye’s Demirören Yatırım Holding A.Ş. Group of Companies, four small hydroelectric power plants are planned to be restored and operated in the Kalbajar and Lachin districts under a public-private partnership model. The project is expected to provide an uninterrupted electricity supply to approximately 7,000 households annually. Its total value is USD 27.5 million.
Shafag Solar Power Plant
The Shafag Solar Power Plant, the first utility-scale solar energy project and the largest foreign investment initiative in the liberated territories, is another project implemented with ABDF’s support. The plant is expected to supply electricity to the Jabrayil district power grid while meeting the energy needs of the Sangachal Terminal through renewable energy. With a total value of USD 204 million, the project aims to develop Azerbaijan’s green energy sector and enhance environmental sustainability.
Bafco Invest LLC
The Fund also supports the restoration of economic activity by participating in large-scale industrial production projects in these territories. The occupational footwear manufacturing project implemented by Bafco Invest LLC in the Aghdam Industrial Park is a notable example of this support. Based on production processes that meet modern quality standards, the project has a total value of AZN 15.1 million.
Shahbulag Mining LLC
Shahbulag Mining LLC is implementing a project involving the operation of the Shahbulag limestone deposit in the Aghdam district and cement production in the city of Khojaly. The project includes the production of cut stone and cement, directly contributing to construction and reconstruction activities in Karabakh and Eastern Zangezur. The project’s total value is AZN 5.17 million.
Tangible Opportunities Created through Guarantee and Subsidy Support
The guarantee and subsidy mechanism implemented by ABDF further facilitates entrepreneurs’ access to financial resources and minimises credit risks. Under the mechanism, state guarantees cover up to 90% of loans obtained by entrepreneurs from banks and non-bank credit institutions. In addition, 10 percentage points of the annual interest rate are subsidised by the state for a period of up to 36 months, and an additional grace period is applied to the loans.
To date, the Fund has provided state guarantees totalling AZN 56.5 million for AZN 66.8 million in loans obtained from banks for 52 business projects. Subsidies amounting to AZN 17.3 million have also been approved for these projects.
Local Businesses Supported through Concessional Loans
The concessional loan mechanism aimed at supporting entrepreneurship enables businesses operating in the liberated territories to access financial resources on more favourable terms. These loans feature lower interest rates, long-term repayment schedules, and grace periods, significantly reducing the financial burden on entrepreneurs and encouraging the sustainable development of their businesses.
To date, entrepreneurs have received a total of AZN 45.8 million in concessional loans for 28 projects in the liberated territories.
The financing mechanisms provided by ABDF make an important contribution to increasing economic activity, creating new jobs, and ensuring the sustainable development of the liberated territories. They also help establish long-term access to finance for the expansion of entrepreneurship. This approach accelerates the implementation of business initiatives and enables the region’s economic potential to be mobilised more effectively.
