The U.S. has approved a credit line to finance Azerbaijan’s first communication satellite despite strong opposition from Armenian lobby groups in the U.S. which argue it could be used for military purposes. The credit agreement between the U.S. Export-Import Bank, an agency of the U.S. government, and the Government of Azerbaijan to finance a purchase of the Azerspace satellite from the U.S. manufacturer Orbital Sciences Corporation will be signed in May 2011. The deal costs US$ 120 million, of which 85 percent will be covered by the loan from the U.S. bank and repaid by Azerbaijan over the next 10 years. The application for Ex-Im financing was made by BNP-Paribas of New York City, and the loan is guaranteed by Azerbaijan's Ministry of Finance. A 15 percent share will be paid by the government of Azerbaijan.

Following the bank’s decision, the Armenian National Committee of America (ANCA), which presents itself as an “Armenian American grassroots political organization”, issued a statement arguing that the satellite could “strengthen Azerbaijan's military capabilities” especially considering the constant military rhetoric from official Baku to regain control over Nagorno-Karabakh by any means.

“The Obama Administration's business-as-usual approach with Ilham Aliyev, who has been seriously preparing for war, undermines America’s long term interests in stability in this region”, said Aram Hamparian, Executive Director of the ANCA, in his statement on April 27. “We should not, in any way, use American resources to reward warmongering or add to the capabilities of a dictator, who is openly threatening to use every asset at his disposal to renew his country's aggression”.

The statement says that over the past three months, the ANCA has conveyed the Armenian American community's legal, technical and political opposition to this transaction in a series of letters and meetings with senior officials of the Export-Import Bank and the State Department. Hamparian noted that the bank had assured the ANCA that the satellite “lack[s] military capabilities” and that it had taken “appropriate safeguards” to keep this satellite out of the hands of “military entities.”

Baku, however, has repeatedly stated that the Azerspace/Africasat 1A satellite will be used only for commercial purposes. “Azerbaijan will possess its own satellite in the near future. This is very important for the image and prestige of the country. But first of all, this project is important from a practical point of view as incomes from the commercial use of the satellite will bring new opportunities for us as well”, President Ilham Aliyev stated at a governmental meeting on April 12. The president assured that the satellite launch will provide impetus for developing the national space industry, which is part of “our state policy”. The government views developing the information technologies sector, including space industry, as part of its broader plans to diversify Azerbaijan’s economy and transform it into a second priority after the oil-and-gas sector.

In March, the government established the JSC “Azerkosmos” (Azerspace) with the charter capital of 40 million manat (US$ 50 million). 100 percent of the JSC’s shares are state owned. The company operates under the Ministry of Communication and Information Technologies. According to the charter, the main goal of the JSC is to launch the Azerbaijani satellite into orbit, its management and operation, as well as providing satellite communications services. All necessary contracts for producing and launching the satellite are now signed. According to the contracts, the Virginia-based Orbital Sciences Corporation will design, build and deliver the Azerspace/Africasat-1a commercial communications satellite.

The satellite will be based on Orbital’s flight-proven Star-2 platform and will generate approximately five kilowatts of payload power for 36 active transponders. The Azerspace/Africasat-1a satellite will provide services to Azerbaijan, Central Asia, Europe and Africa. Following its launch, the spacecraft will be located in geosynchronous orbit (GEO) at 46 degrees East longitude through an arrangement between Azerbaijan’s Ministry of Communication and Measat of Malaysia, which owns the rights to the orbital slot. Upon completion of in-orbit testing, operational control of the satellite will be handed over to the ministry, which will continue to operate the spacecraft from its control center in Baku.

Ali Abbasov, Azerbaijan’s Minister of Communications and Information Technology, believes that the project is a key advancement for Azerbaijan as it expands its communications infrastructure within its own borders and its connectivity to Europe, Central Asia, Africa and the Middle East.

A French Ariane 5ECA rocket carrier will launch the satellite into orbit from a spaceport near Kourou in French Guiana, while Orbital Sciences has awarded Spanish GMV company the contract for developing the complete ground control system. The ground segment architecture is made up by 3 control centers, two in Azerbaijan and one on Measat’s Malaysia site. The contract includes the supply of equipment for real-time satellite monitoring and control.

The satellite is scheduled to launch in 2012, and will improve the quality and stability of Azerbaijan’s television broadcasts and communications while also turning Azerbaijan into a relay site for signal transmission between Europe and Asia. The total cost of the project will exceed 160 million manat (US$ 200 million) including insurance for the satellite, its operation and staff training expenses apart from the production and launching cost. The Ministry, however, believes that the project will be profitable and could return the investments in six to seven years. Azerbaijan is going to use only 20-25 percent of the satellite’s capacity, while the rest will be given for rent. The Ministry is undertaking negotiations with potential buyers and has already reported that Malaysia had offered to purchase 40 percent of AzerSpace’s capacity.