SOFAZ assets reach $33.2B
The assets of Azerbaijan’s state oil fund SOFAZ, which is in charge of accumulating and managing the country's oil and gas revenues, jumped by 0.18 percent.
SOFAZ Executive Director Shahmar Movsumov announced about this at a press conference in Baku on April 18, noting that the figure hit $33.207 billion as of April 1.
“The increase was mainly due to a sizeable positive effect of changes in the exchange rates of investment portfolio currencies (mainly Euro, Russian ruble and British pound), as well as the impact of asset appreciation (specifically, equity and gold portfolios),” said Movsumov.
Budget revenues of SOFAZ reached 3.273 billion manats, while budget expenditures constituted 3.848 billion manats in January-March 2017. SOFAZ’s revenues of 2,899.1 million manats were received from implementation of oil and gas agreements, including 2.894 billion manats from the sale of profit oil and gas, 0.1 million manats as bonus payments and 4.6 million manats as transit payments.
The revenues from managing assets of the Fund amounted to 373.4 million manats, while the extra-budgetary expenditures related to the revaluation of foreign exchange totaled 873.9 million manats in January-March 2017.
Being a special purpose state organization, the primary objectives of SOFAZ are to help maintain macroeconomic stability in the country and to generate wealth for present and future generations.
Movsumov went on to say that SOFAZ will continue to invest in real estate within its investment strategy on real estate. The share of SOFAZ investments that can be made in real estate is 10 percent of the total investment portfolio.
The practice of investing in real estate abroad has already allowed the Fund to acquire Gallery Actor, a mixed-use office and retail complex located on Pushkin Square in Moscow for $133 million, an office complex in London's West End for £177.35 million, a property in Paris for €135 million, Pine Avenue Tower worth $447 million in Seoul and Palazzo Turati office building in Italy, Milan.
Movsumov further mentioned that the Fund extended the term of the deposit in the International Bank of Azerbaijan (IBA) for another year.
"We have two deposits in the IBA, the first of which expired in March, and we extended it for another year, the second expires in May this year, I think that its term will also be extended,” he said, adding that new deposits are not planned.
The amount of each deposit is $ 500 million.
Speaking about the transfers to the Central Bank of Azerbaijan (CBA) to ensure macroeconomic stability in 2017, Movsumov said that the figure may be less than 7.5 billion manats.
“The SOFAZ budget for 2017 stipulates allocation of 7.5 billion manats for these purposes, and in the first quarter we transferred 2.279 billion manats to the Central Bank. However, the economic situation is such that, I think, that this expenditure will not be executed completely,” Movsumov said.
SOFAZ earlier reported that these funds [7.5 billion manats] were planned to be directed to implementation of the activities stipulated in the monetary program of the Financial Stability Board for 2017, as well as to realization of measures to ensure macroeconomic and financial stability in the current year and in the medium term. Part of these funds will also be directed to measures to accelerate the process of recovery of the IBA. SGC
Shahmar Movsumov also excluded any problems with the financing of the projects of the Southern Gas Corridor.
He said that the Fund did not issue any funds for the SGC in the first quarter of 2017.
“However, the 2017 budget stipulates allocation of funds to the SGC project realization. I can say with confidence that SOFAZ has funds to finance the project, so no problem will arise with funding this year. Besides, negotiations are underway for the financing of the Southern Gas Corridor in next two years. "
The Southern Gas Corridor is one of the priority energy projects for the EU. It envisages the transportation of gas from the Caspian region to the European countries through Georgia and Turkey.
As part of the Stage 2 of the Shah Deniz development, the gas will be exported to Turkey and European markets by expanding the South Caucasus Pipeline and the construction of Trans Anatolian Natural Gas Pipeline and Trans Adriatic Pipeline.