The construction of an Iranian-Azeri auto factory officially started on Sunday at an industrial zone located in the city of Neftchala in Azerbaijan.
Iran’s Minister of Industries, Mining and Trade Mohammad Reza Nematzadeh, Iran Khodro Company’s CEO Hashem Yekezare and Azerbaijan’s Minister of Economic Development Shahin Mustafayev attended the groundbreaking ceremony at which six memorandums of understanding were signed, IRNA reported.
Iran’s leading carmaker IKCO and Azerbaijan’s Azeurocar, which have signed a joint venture worth $15 million, are set to produce 10,000 passenger vehicles per annum in Azerbaijan.
The factory will be set up in 10 hectares of land and the joint venture is expected to create 300 jobs. The vehicles will be sold in Azerbaijan and also exported to other regional countries.
Following the initial agreement signed in April, IKCO will provide 25% of the overall investment needed for setting up the factory that is to become operational in 2018. Azerbaijan has invested $14 million in the joint venture.
Speaking at the event, Iran’s industries minister said with the increased efforts of both the countries’ top officials, bilateral ties between Iran and Azerbaijan have developed further over the past few years.
“There are plenty of opportunities to further expand business ties,” he said.
Nematzadeh noted that Iran is prepared to train the factory’s workforce, adding that if everything goes according to plan, the production lines will be completed in nine months and inaugurated in the first half of the coming year.
Also present at the event, IKCO’s CEO noted that one of the company’s main export strategies is to target Iran’s northern neighboring countries as well as Central Asian states.
Highlighting the history of economic cooperation between Iran and Azerbaijan, Yekezare said Azerbaijan can act as IKCO’s major export hub in the region.
“To assure success, automakers must cater to the needs of both local and foreign markets by increasing competitiveness,” he said.
The CEO noted that IKCO will be chiefly providing the technological knowhow and its next step is to set up a bus manufacturing line in Azerbaijan.
Mustafayev also noted that rising bilateral trade between Iran and Azerbaijan “is testament to the political will of the presidents of the two countries.”
Last February, President Ilham Aliyev granted permission for setting up production lines to make Iranian cars in Azerbaijan.
Mustafayev added that President Hassan Rouhani’s recent visit is bound to further strengthen bilateral ties.
President Rouhani arrived in Baku, Azerbaijan, on Sunday for a two-day visit and attended trilateral talks with Moscow and the host country.
“Setting up an auto production plant will further develop the level of economic cooperation between the two sides,” Mustafayev said.
He added that there are 450 firms in Azerbaijan that have been set up with $2.5 billion worth of Iranian investment.
Iran has invested nearly $150 million in Azerbaijan’s non-oil sectors.
The officials were also briefed on the models lined up for the joint venture, as well as the deal’s terms and conditions.
IKCO will start by producing Dena, Runna, Samand and Soren from semi-knocked-down kits at the new plant.
