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Azerbaijani Deputy Minister reveals expectations from "Gross Contract" model

Deputy Minister of Digital Development and Transport of Azerbaijan, Rahman Hummatov

23 September 2025 18:02 (UTC +04:00)

In order to maintain the quality of public transport services at a stable high level in Baku and Absheron, as well as to create a sustainable financing mechanism for the renewal of the bus fleet, a "gross contract" system will be introduced, Deputy Minister of Digital Development and Transport of Azerbaijan, Rahman Hummatov, told APA-Economics.

Explaining the essence of the model, the deputy minister said that the revenue from fares will be collected by the regulatory body, part of the fee for the services provided by the carrier will be paid from these funds, and the rest from funds allocated by the state.

"There are several factors here. First, the risks of carriers associated with a decrease in passenger traffic or changes in the volume of fare revenues will decrease. This will prevent the carrier from attempting to attract additional passengers in order to optimize or maximize its revenues and will encourage it to operate solely with the aim of fulfilling the terms of the contract. The quality of the service will increase, since the carrier's profit will now depend not on the number of passengers, but on the extent to which it complies with the terms of the "gross contract" concluded with the regulatory body - the carrier will be interested in improving the level of service and strict adherence to the traffic schedule. At the same time, the regulatory structure will stimulate the carrier to maintain a high level of services by introducing a system of penalties for failure to fulfill obligations under the "gross contract," Rahman Hummatov emphasized.

The Deputy Minister added that the accessibility of services will increase - carriers will not be interested in choosing between relatively profitable and unprofitable routes:

"This will ensure a similar level of service on suburban routes and increase the accessibility of public transport for the population. In addition, dependence on market factors will decrease - the carrier will be protected from external influences such as an economic crisis or pandemic, which will ensure the sustainability of the transport system.

Another important point is that this sector will exit the "shadow" economy. Promoting the transition of routes to cashless payments will create a fully transparent mechanism for collecting fares, paying for the services of carriers, substantiating their costs and revenues, thereby removing this sector from the "gray" zone."