Azerbaijan ahead of COP29: Price hikes and construction works

Image by Arzu Geybullayeva

At the end of June, Azerbaijan, this year's host of COP29, saw an increase in tariffs for gasoline, diesel, public transport, and household waste transportation. According to the Tariff Council, state agency in charge of setting local prices, the decision to raise the price for diesel fuel was environmental given the impact of diesel fuel on the environment. Experts think otherwise and say the hikes are government attempt to offset declining oil and gas revenues through price hikes and to dress up those price hikes as addressing “ecological problems.” Meanwhile, the capital Baku is under mass renovation work as city residents cope with scorching heat, traffic jams due to road closures, and the dust from reconstruction.

Recent price hikes

Independent economy experts say next in line for price hikes are basic food products, as a result of raising fuel costs. None of which were greeted with enthusiasm as residents of Baku, interviewed by the local media, expressed their dissatisfaction with the rising costs of fuel and public transportation.

In an interview with Meydan TV, agriculture expert Vahid Maharramli said hikes in food costs are unavoidable as a result of increased tariffs on fuel. “Our transportation expenses increased by 25 percent. This means serious hardships for villagers. Because as a consequence this will raise costs of agricultural production. Sharp hikes for food are expected in the coming months.” 

Economist Natig Jafarli told Meydan TV, “this is just the beginning,” adding “expect increased costs of utility services, and the decline of the national currency, manat.”

Speaking to Abzas Media, economist Akram Hasanov said recent hikes signal state budget deficit as revenues are in decline and the authorities are looking into ways to cover that deficit. “There is no other reason,” he explained.

Opposition politician Camil Hasanli, agrees. “Rather than giving up on corruption and embezzlement, the ruling elite is covering the deficit at the expense of the people. I expect price hikes in other areas too but not for salaries, pensions, and other allowances. Azerbaijan is an oil and gas [producing] nation and the authorities must show mercy on citizens,” Hasanli told Abzas Media.

“All costs have gone up,” said a resident of Baku in an interview with Meydan TV. “Let me explain it this way, I earn 320 manats salary. How can I afford a vacation in Quba (northern region of Azerbaijan) when a night at a hotel starts at 170 manats. I don't want to go Dubai, I want to go to Quba but I can't even go anywhere in Azerbaijan. A member of the parliament makes 5000 manats and says that is not enough. How can I live on 300 manats then?”

Elsewhere in the country, citizens interviewed by media complained of low wages, unemployment and newly raised tariffs on petrol and public transportation. “In Goychay the only two places of employment are hospitals and police,” said one resident of the region. “My daughter in law was unemployed for a long time. She has now found a job at a bakery, earning 200 manats. How can she provide for a family on that?” said another resident interviewed. “People have lost their purchasing power,” said a woman selling food at the local market.

Other residents of the capital interviewed by Meydan TV told the media platform that domestically it is impossible to go anywhere on vacation given high costs. Trips abroad are not even on the agenda.

But, according to the member of parliament Elman Nasirov, there is no need to exaggerate. He laid the blame on the opposition for wanting to confuse people. “But people see the right from wrong. And they know that Azerbaijani citizens and their social welfare are at the center of the policy defined by the president of Azerbaijan Ilham Aliyev.”

Azerbaijan ranks lowest among its regional neighbors when it comes to average monthly wages. As of January–April 2024, the average monthly wage totaled AZN 1007.5  [USD 592] while in Georgia, Armenia, Kazakhstan and Russia this amount was USD 694, USD 708, USD 809, and USD 948 respectively.

New obstacles for taxi drivers and vehicle owners

In addition to recent price hikes affecting Azerbaijani citizens country-wide, after a decision adopted by the Ministry of Digital Development and Transport on July 1, thousands of taxi drivers were slapped with a new regulation. According to this decision, vehicles more than eight years old will no longer be eligible to obtain a taxi license. Another requirement that came into effect requires vehicle owners to have specific colors based on their routes. As such, vehicles designated for inter-city must be white, intracity vehicles must be red, and electric vehicles must be green. Drivers of taxis must also install cameras with a memory card with a storage capacity of up to a month.

The new regulations sharply reduced the number of available taxi vehicles. The decline was not only reflected in the data provided by the Ministry of Digital Development and Transport — a drop from 28,000 registered taxi vehicles to 11,696 — but also regular city dwellers who have taken their complaints to social media.

Ever since the new law went into effect it is impossible to find a taxi. If before a taxi would show up in a minute, now it take 30 minutes. I may have to buy a car. Why does everything in this country work against its citizens?

The costs of regular taxi rides have also increased according to residents of Baku and local media reports.

Whether recent measures introduced for taxi drivers are part of COP29 beautification measures or steps towards a monopoly remains to be seen. According to Turan News Agency, ahead of this recent decision, experts encouraged the authorities to replace all taxis with electric vehicle ahead of COP29, but that advice rang hollow. The justification of recent hikes on gas and diesel fuel by the Tariff Council also makes no sense given the new regulations on taxis. According to the Tariff Council's statement, “the price change will accelerate the transition to fuel-efficient hybrid, electric, and compressed natural gas engines, while ensuring the sustainability of energy security.” If this was the case, then why not take into account advice from experts and replace all taxis with electric vehicles?

City wide restrictions and state spending spree

Ahead of COP29, which the capital Baku will host between November 11 and 22, the city has been under massive repair and reconstruction work. Residents who spoke to Global Voices complained of traffic jams and rerouted public transportation routes which now make a regular journey twice if not thrice the length. Economist Natig Jafarli in an interview with Meydan TV said some AZN 470 million (approximately USD 277 million) were allocated for city-wide renovation work ahead of COP29. “These works illustrate that this government cares more about making an impression for its international guests, not impressing its citizens,” Jafarli told Meydan TV. Officially the authorities and the organizing committee have not disclosed the total budget allocated for these renovation works nor for financing the whole event.

Some experts estimate the indirect expenses for COP29 to exceed USD 1 billion, including expenditure on infrastructure, hotel, transport, logistics, communication, and security.

This is not the first international event Azerbaijan has hosted; nor will it be the last. Since 2010, a series of events have taken place in the country including the Eurovision song contest in 2012, the European Games in 2015, the Islamic Solidarity Games in 2017, the European Youth Olympic Festival in 2019, the Formula 1 Grand Prix since 2016 (most recently the hosting contract was extended until 2026), and four European Football Championship games in 2020, to name a few. According to academic Gubad Ibadoglu, hundreds of millions of manats “have been allocated from the state budget to finance international, country-level, and other similar events by the official Baku,” with hundreds of millions more forecasted for the same purpose for the following years.

All of this begs the question: who is footing the bill for COP29 or any previous and future events in Azerbaijan?

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