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SOFAZ to estimate its 2014 budget with $100 oil price

27 September 2013 12:09 (UTC+04:00)
SOFAZ to estimate its 2014 budget with $100 oil price

By Aynur Jafarova

The state oil fund SOFAZ, an entity that accumulates and manages Azerbaijan's oil and gas revenues, will use oil prices of $100 per barrel as the basis in calculating its budget for 2014, while a few weeks ago, the fund was using $90 as the baseline, SOFAZ Executive Director Shahmar Movsumov told journalists on September 26.

"The outlook for oil prices has changed and accordingly, the budget of the fund for next year will be drawn up on the basis of $100 per barrel," he said.

SOFAZ's 2013 budget was also calculated on the basis of the $100 figure.

The revenues of SOFAZ's budget were approved for the current year at over 11.482 billion manats, while expenses at over 13.403 billion manats.

Movsumov said further that in 2013, SOFAZ allocated around 11 million manats for the implementation of the Baku-Tbilisi-Kars railway project.

According to him, the railway project, whose implementation is successfully underway, is one of the major projects financed by the fund.

"The financing of this project will be continued in 2014," Movsumov said.

The Baku-Tbilisi-Kars railway is being built in accordance with an inter-governmental agreement reached by Azerbaijan, Georgia and Turkey. The railway will increase the flow of containers and other types of cargo from Asia to Europe. Around 30 million tons of cargo a year are to be transported via the Baku-Tbilisi-Kars railway line, which will become a direct route to the European rail network.

Movsumov also said SOFAZ's gold reserves will reach 40 tons in 2014.

He said that until the end of 2013 the total amount of gold purchased by SOFAZ will reach 30 tons, and 20 tons of the volume will be delivered to the country.

"So far, 26 tons of gold have been purchased, most of which has already been delivered to the country," Movsumov said.

He said the process of a phased purchase of gold over three years is effective, which allows to provide the average cost of purchased gold considering the volatility of prices for this precious metal.

According to the plans, SOFAZ buys gold in batches. The fund began buying gold in the first quarter of 2012. The first batch of gold in the amount of 32,150 troy ounces was delivered to the country on January 11, while the second batch was brought on February 1 and the third one on March 1.

SOFAZ, which was established in December 1999, aims to help maintain macroeconomic stability in the country and to generate wealth for present and future generations.

At present, the assets of SOFAZ amount to $34.68 billion.

As SOFAZ reported, since early 2013 SOFAZ's revenues have hit 10 billion manats, while expenses in this period made up 8.6 billion manats.

Around 243.6 million manats in the breakdown of SOFAZ's expenses were allocated for the improvement of social conditions of refugees and internally displaced persons, while 106.4 million manats were designated to finance the reconstruction project on the Samur-Absheron irrigation system.

Transfers to the state budget amounted to 8.17 billion manats. Around 12.3 million manats were spent for Azerbaijani students to study abroad under the state program for 2007-2015. Around 10.9 million manats were directed to the financing of the construction project on the Baku-Tbilisi-Kars railway.

Moreover, SOFAZ allocated around 60.1 million manats for the construction of a new floating drilling rig of a new generation during this period.

The official exchange rate for September 26 is 0.7845 AZN/USD.

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