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SOFAZ revenues amount to $126 billion

25 May 2016 14:48 (UTC+04:00)
SOFAZ revenues amount to $126 billion

By Fatma Babayeva

Revenues of the State Oil Fund of Azerbaijan (SOFAZ) amounted to $126.2 billion during the entire period of its activity.

The remark was made by Ziya Kangarli, chief investment advisor at SOFAZ during the Forum on “Decrease in oil prices and economic reforms: Challenges and Opportunities” which was held at Khazar University on May 24.

Kangarli noted that revenues of the SOFAZ are generated by two sources: directly by the revenues from sale of oil and by asset management.

The spending totaled about $92 billion during the lifetime of the fund, said Kangarli, adding that it covers operating costs, which share is minimal, project financing and transfers to the state budget.

Profitability of the Fund from asset management amounted to 1.24 percent in 2015.

"If we have a look at more long-term periods, the profitability was 1.51 percent over the past three years, 1.5 percent over five years and 2.42 percent over 10 years, added chief investment adviser.

SOFAZ was established in 1999, and its assets amounted to $271 million at that time.

As of April 1, 2016, the assets of the Fund increased by 2 percent compared to early 2016 ($33.57 billion) to $34.25 billion.

The main goals of the state oil fund is to accumulate resources and to place the fund’s assets abroad in order to minimize the negative impacts of oil prices on the economy, to prevent the Dutch disease to some extent in the country, to promote resource accumulation for future generations and to support current social and economic processes within the country.

In accordance with SOFAZ's regulations, its funds may be used for the construction and reconstruction of strategically important infrastructure facilities, as well as, solving important national problems of Azerbaijan.

Currently, 13.2 percent of the fund’s investment portfolio is placed in bonds of agencies and international organizations, 8 percent in sovereign debt securities, 20.8 percent in financial bonds, 44.2 percent in corporate bonds, 8.5 percent in short-term commercial securities, and 1 percent in guaranteed bonds.

Around 7 percent of the investment portfolio is placed in deposits and monetary market tools, 3.1 percent in gold, 4.6 percent in real estate, 7.7 percent in assets, and 2.5 percent in investments in the projects.

So far, SOFAZ has funded many strategic projects for Azerbaijan including the construction of the Baku-Tbilisi-Ceyhan pipeline, the Baku-Tbilisi-Kars railway, the Southern Gas Corridor, the Oil and Gas processing and Petrochemical Complex, as well as, the Samur-Absheron irrigation system, the Oguz-Gabala water pipeline and the State Program on education of Azerbaijani youth abroad.

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Fatma Babayeva is AzerNews’ staff journalist, follow her on Twitter: @Fatma_Babayeva

Follow us on Twitter @AzerNewsAz

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