Analysis of key indicators affecting economic efficiency in the distribution networks of “AZERISHIG” OJSC

Abstract

The course of effective economic reforms implemented in our Republic is being successfully continued and implemented consistently and systematically in accordance with the requirements of the time. As one of the components of the mentioned reforms, by the decree of the President of the Republic of Azerbaijan dated February 10, 2015, the operation of distribution electricity networks in the territory of the Republic was entrusted to the newly established “Azerishig” OJSC.

The power sector, together with the oil and gas sectors, plays a leading role in the social and economic life of Azerbaijan. As a result of rapid economic development, electricity production in the country is expected to increase by around 3.0% annually during 2023-2027. Distribution electricity networks are one of the main parts of the power system and have a significant impact on the effective operation of the system and its technical and economic results.

For this reason, it is advisable to quickly direct investments in the power system to the distribution sector, and reforms in this direction are being implemented consistently. Prioritizing the renewal and strengthening of distribution networks results in a direct economic benefit by reducing electricity losses, and this indicator is increasing every year. The reforms implemented in the country have created favorable conditions for achieving significant achievements in the creation of a modern infrastructure related to electricity supply. It is precisely in such a period that the economic efficiency of the power system as a whole, as well as its most responsible and difficult sector, the electricity distribution sector, is very relevant. The indicators that determine the economic efficiency of distribution networks have been studied very little by economists as a separate field. Scientific research in this field is non-existent not only in our Republic, but also in the Russian Federation and Turkey. Scientific research on economic efficiency in the field of power engineering mainly covers the production processes of electricity. In this article, we will try to examine and analyze in detail the factors affecting the economic efficiency of the power industry as a whole, as well as in the electricity distribution networks.