We would like to ensure that you are still receiving content that you find useful – please confirm that you would like to continue to receive ILO newsletters.
05 December 2000
Azerbaijan has established a legal framework for conducting tenders.(5) These are generally conducted in accordance with the Law on Tenders. However, tenders regarding certain types of works and services are governed by specific rules and regulations. In particular, tenders for the management of state companies and tenders for the procurement of goods and services by state enterprises are governed by government regulation. The distinction between general tenders and specific tenders is important, as the rules that govern each are different.
The general rules for conducting tenders in Azerbaijan require that tenders must be advertised in the mass media at least twice (a 30-day notice and a 20-day notice) before the tenders are held. The advertisement must include the following information:
In contrast, a tender for the management of a state enterprise is subject to a more detailed announcement, which must include the following information:
Generally, all tenders are open to the public. However, the Law on Tenders authorizes holding a closed tender in the following conditions:
As an exception, a closed tender for the management of state companies is justifiable if there is only one contestant available to bid.
Each contestant may submit one tender offer/bid, signed and sealed in an envelope.
On the tender date, the tender commission must open the envelopes and read all
tender offers in the order in which they were received. Under the Law on Tenders,
any fee charged for participating in the tender may not exceed 0.5% of the estimated value of the property subject to the tender, or 1.5 times
the expense of holding the tender. The bidders are also required to make a security
deposit of not more than 1% to 2% of the value of the property.
The winner of the tender must execute a binding contract within the timeframe set forth either by law or by the tender commission. Under the Law on Tenders, the entity conducting the tender must sign the contract within three days of the date on which the tender closed. The winner must then countersign the contract within five days of its receipt. The Regulations on the Transfer of State Enterprises into Management do not impose any time limitations on the execution of a management contract, although a tender commission often requires that the contract be executed within 30 days of the date on which the commission signed the protocol on the results of the tender.
The Regulations on the Procurement of Goods and Services are more stringent as to timing. A contract is executed upon the tender commission's acceptance of the tender offer, unless the tender commission provides otherwise. Usually, most contracts executed on a tender basis must be subsequently approved by an executive authority. In this case the tender commission will establish a timeframe within which the winner must sign the contract. If the winner does not sign within the deadline, the tender commission will offer the opportunity to the bidder that offered the next best terms.
The rules that apply to tenders for the management of state companies, and to tenders for the procurement of goods and services by state enterprises, are subject to amendment by the president of Azerbaijan.
For further information on this topic please contact Daniel Matthews or Elvira Mamedzade at Baker & McKenzie by telephone (+99412 97 18 01) or by fax (+99412 97 18 05) or by e-mail (firstname.lastname@example.org or email@example.com).
(1) A tender for the reconstruction and
modernization of the 44-kilometre Alyat-Gazi Magomed highway was conducted in
August 1999. The winner was an alliance of Turan Hazinadaroglu Inshaat &
Tijaret and Oztac Inshaat Milzemeleri & Tijaret. The project is valued at
$27 million, and has been financed by the Kuwait Fund for Arab Economic Development
($17.7 million) and the Islamic Development Bank ($13.1 million). The contract
for the modernization of the highway was signed on November 3 2000. Reconstruction
is expected to begin on December 1 2000.
(2) On October 10 2000 the Ministry of State Property conducted a tender for the management of Azerbaijan Aluminium Joint Stock Company, which was won by Fondel Metal BV. The management contract was signed on November 20 2000. Under the management contract, Fondel Metal has committed to managing Azerbaijan Aluminium Joint Stock Company for 25 years, and to investing $1 billion.
(3) Azerigas recently held two tenders for the purchase of laboratory equipment for gas quality analysis and for the purchase of 765 gas meters. The results of both tenders are now pending. The tenders are financed by the World Bank, which allocated $20.2 million for the modernization of Azerbaijan's gas system.
(4) On September 23 2000 the government announced a tender for the management of Bakielectikshebeke Joint Stock Company, a power distribution company operating in Baku. The tender was held on November 28 2000.
(5) This includes the following legislation:
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.