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Azerbaijan’s space projects, Business New Europe

In February, Azerbaijan launched its first commercial communications satellite Azerspace-1. Designed and built by the Orbital Science Corporation, the US manufacturer of spacecraft and missile defence boosters, Azerspace-1 is designed to tap into the massive demand for high-quality broadband internet, data and broadcasting services across the Caucasus, Central Asia and Africa.

The satellite was sent into orbit by Azercosmos, an Azerbaijani state-owned company and the first satellite operation in the Caucasus. Established in 2010, Azercosmos implements the launch, operation and exploitation of Azerbaijani satellites. It is planned that the 3.2-tonne satellite, currently in a Malaysia-owned an orbital slot as part of an arrangement between Azercosmos and MEASAT Satellite Systems of Malaysia, will be controlled by local Azeri specialists at the control centres in Baku and Nakhichevan, the hometown of country’s president. Provided by Orbital Science Corporation, the ground control systems will include the ground antennas, radio-frequency electronics and computer platforms to monitor and control Azerspace-1.

This space project is part of Azerbaijan’s attempts to double the country’s non-oil economy over the next decade. The Azerbaijan economy is heavily dependent on oil and gas, with the sector accounting for about 50% of GDP. Its share of tax receipts and exports is even higher – about 75% and 95% respectively.

As part of a government programme, almost 200 Azerbaijani students are now studying space sciences at universities in the US and France. And to push things along, a presidential decree declared 2013 to be a year for information and communications Technology (ICT) in Azerbaijan. “The growth rate for the ICT sector in Azerbaijan was 18% in 2012. It is remarkable that there has been a twofold increase in ICT every three years since 2004, which is 2.5-times more than the world average,” says Rashad Nabiyev, CEO of Azercosmos.

Azerbaijan’s decision to jump on the space bandwagon shouldn’t come as much of a surprise given the economics. According to a 2012 report from the US Space Foundation, the global space industry was worth a total of $290bn in 2011, up 12% from 2010 and up 41% since 2006.

According to the same report, Russia, India and Brazil grew their space spending by 20% in 2012, while traditional players like the US and Japan saw their budgets remain largely unchanged. The increase in budgets can be explained by the growing demand for home broadband and satellite television in emerging markets.

Costing the country over $200m, Azerspace-1 is Azerbaijan’s opportunity to tap into the rapidly growing demand for the satellite-based communication services, including e-government, in this mountainous region. “It isn’t only a question of connectivity though,” says the US-educated Nabiyev. “Given the current growth rate of ICTs in Azerbaijan, we expect to achieve the economic growth and long-term cost avoidance in our satellite projects.”

The government hopes to recover the satellite’s costs by leasing out space on the satellite. In an interview with Azeri news service APA, Azerbaijani Minister of Communications and Information Technologies Ali Abbasov said that Azerspace-1 will bring in $650m of the revenue over its 15 years of mission life.

The optimism surrounding Azerspace-1 is reflected in Azercosmos ambitious future plans. “Alongside Azerspace-1, we plan to launch the ‘Earth Observation’, a low-earth orbiting satellite, in 2015 and Azerspace-2, the second communications satellite, in 2016” Nabiyev says.

While Azerspace-2 will increase the capacity of telecommunication services, the “Earth Observation” is planned to assist agricultural and environmental monitoring, mapping, transport infrastructure, offshore oil exploration, and managing emergencies and natural disasters.

Azerbaijan’s big ambitions for its space programme have attracted interest from existing players. Azerspace-1 was launched using an Ariane 5 rocket, part of the French satellite launching system, and Azercosmos has enjoyed strong support from other leading French companies. “Azercosmos has enjoyed close relations with companies from France in almost every stage of Azerspace-1 implementation. We ensured financing from highly esteemed banks including BNP Paribas and other French intermediary banks,” Nabiyev says.

The Orbital Science Corporation’s $205m contract with Azercosmos claims to have supported 1,500 US jobs and “is an example of the bilateral relationship between the US and Azerbaijan, America’s largest trade partner from the South Caucasus,” according to the Virginia-based Corporation.

President Aliyev’s plan to turn ICT into Azerbaijan’s second main business after the oil and gas industry may seem a tad bit too optimistic – total investment in the ICT industry last year was $414m, accounting for just 2% of total investment in economy. Yet Azerbaijan is rapidly becoming a regional hub for the industry as it aims to become one of the leading nations in other large-scale regional projects, such as TASIM (Trans-Eurasian Information Super Highway) and EPEG (European-Persian Express Gateway). These fibre-optic cable networks are planned to connect Europe with the Middle East and Eastern Asia. Via Azerbaijan, of course.