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On 18 July 2023, amendments to Presidential Decree No. 975,
dated 23 October 2023, were promulgated. The amendments approve the
Rules for Holding Competitive Bidding (Auctions and Tenders) to
Grant Mining Rights, replacing the Regulations of Terms
and Conditions of Holding Tenders and Bidding to Grant Mining
Rights.
Unlike the Regulations, where competitive auctions were jointly
organized by the Ministry of Ecology and Natural Resources and
Ministry of Emergencies, the Rules assign this responsibility to
the State Agency for Use of Mineral Resources under the former. The
Rules streamline regulation of competitive bidding by approving the
procedures to apply for, document results of, and to hold, a
bidding.
Rights to mine minerals are granted based on competitive bidding
except where they are granted pursuant to direct negotiations.
Mining rights for non-metallic (non-ore) mineral deposits are
granted at auctions and mining rights for ore mineral deposits are
granted through a tender. Auctions are open while tenders can be
open and closed.
Competitive bidding is organized by the State Agency for Use of
Mineral Resources under the Ministry of Ecology and Natural
Resources. The Rules do not affect the cases when mining rights are
granted pursuant to direct negotiations, which continue to be
governed by the Cabinet Resolution No. 216 of 10 May 2019.
Entities and individuals of the Republic of Azerbaijan as well
as of foreign states, regardless of types of ownership and legal
form, may participate in an open tender and auction.
Only individuals and entities invited for this purpose may
participate in a closed tender. A closed tender is held upon any of
the following cases: (i) geological information about subsoil being
granted is confidential; (ii) granting subsoil for extraction of
radioactive raw materials; and (iii) participation in the tender of
defense enterprises.
To prepare for bidding, the Agency considers an annual forecast
of the needs of the country’s economy and industry in building
materials. The forecast is submitted to the Agency by the Ministry
of Emergencies before 15 September of the current year.
Having analyzed the data of confirmed mineral deposits
maintained by the State Geological Information Fund, the Agency by
15 December completes a list of mining rights to be put up for
bidding during the next calendar year.
The Agency announces a competitive bidding at least 30 business
days in advance of the bidding. No public announcement is made upon
a closed tender. In closed tenders, documents are sent to
participants ten business days before the date of the tender.
The amount of payment for participation in the bidding and the
starting price of a subject of the competition are determined by
the Ministry of Ecology and Natural Resources under the rules
agreed with the Ministry of Economy.
The Agency annually submits to the auction commission (see
below) a list of subsoil plots to be put up for bidding, including
consents obtained in advance of landowners and relevant state
bodies (institutions) on the allocation of land where mineral
deposits are located.
The Agency forms a commission for each competitive bidding
process. Upon completion of the procedures, the commission is
dissolved.
The commission is competent if at least two thirds of its
members are present in a sitting. Decisions at a meeting of the
commission are taken by an open vote based on a simple majority of
participating members; upon a tie vote, the vote of the commission
chairman is tiebreaking. The commission members have no right to
abstain.
Based on the results of competitive bidding documented by a
protocol, in accordance with the Law, On Licenses and
Permits, a subsoil plot granted is assigned the status
(permit) of a ‘mining allotment’ for use by the winning
bidder.
In the event of disagreements regarding a subsoil plot put up
for bidding, the Agency may engage independent experts and
specialists as consultants. If the disputes related to the holding
of the auction are not resolved between the parties, they are
resolved in an administrative and/or judicial manner.
Originally published July 2023.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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