STATE OIL FUND OF THE REPUBLIC OF AZERBAIJAN
The State Oil Fund is a special purpose state organization in which Azerbaijan’s revenues from implementation of oil and gas agreements are accumulated, efficiently managed and preserved for future generations.
The State Oil Fund of the Republic of Azerbaijan (SOFAZ) was established by Decree № 240 of the President of the Republic of Azerbaijan dated 29 December, 1999 "On Establishment of the State Oil Fund of the Republic of Azerbaijan". Statute of SOFAZ was approved by the Decree of the President of the Republic of Azerbaijan № 434 dated December 29, 2000. SOFAZ began operating after approval of the Decree on "Rules on management of foreign currency assets of the State Oil Fund of the Republic of Azerbaijan" by the President of the Republic of Azerbaijan dated June 19, 2001. Establishment of the Oil Fund is a main part of the oil strategy of Azerbaijani National Leader Heydar Aliyev.
The cornerstone of the philosophy behind the Oil Fund is to ensure intergenerational equality with regard to the country's oil wealth.
GOALS AND OBJECTIVES
The Oil Fund is a special purpose state organization in which Azerbaijan’s revenues from implementation of oil and gas agreements are accumulated, efficiently managed and preserved for present and future generations. Oil Fund was founded in order to manage the oil and gas incomes efficiently as well as to invest them in development of socio-economically important projects and advance spheres.
The main objectives of the Oil Fund are followings:
1. Preservation of macroeconomic stability, ensuring fiscal-tax discipline, decreasing dependence on oil revenues and stimulating development of the non-oil sector
2. Considering that oil and gas are depletable resources ensuring intergenerational equality with regard to the country’s oil wealth and accumulate and preserve oil revenues for future generations
3. Financing major national scale projects to support socio-economic progress
SOFAZ's activities are overseen by a Supervisory Board. The Board reviews the Fund’s reports on the draft annual budget prepared by the SOFAZ’s Executive Director, annual reports and financial statements along with independent auditor's opinion and provides its comments. Members of the Supervisory Board are appointed by the President of Azerbaijan and shall represent both state bodies and civil society.
In accordance with the Presidential Decree No. 73 dated November 27, 2008 7 members of the Supervisory Board were appointed.
SOFAZ is headed by the Executive Director, who is appointed and dismissed by the President of the Republic of Azerbaijan. The Fund's Executive Director represents the Fund, carries out operational management of the Fund's activities, appoints and dismisses employees of the Fund in a manner as determined by the legislation, ensures the management and investment of the Fund’s assets in accordance with the Guidelines approved by the President of the Republic of Azerbaijan.
Execution of SOFAZ’s budget is implemented on the basis of comments provided by the Supervisory Board in accordance with the SOFAZ budget approved by the proper Ordinances of the President of the Republic of Azerbaijan. SOFAZ assets are managed in accordance with Investment Guidelines approved by the Presidential Decree on "Rules on management of foreign currency assets of the State Oil Fund of the Republic of Azerbaijan" No, 511 dated June 19, 2001.
THE INFLOW SOURCES OF SOFAZ
The major sources of income for SOFAZ are:
1. Proceeds generated under production sharing agreements from sales of the Republic of Azerbaijan's share of hydrocarbons; 2. Bonuses paid under the terms of production sharing agreements; 3. Acreage fees paid by foreign investors for use of the contract areas in connection with the development of hydrocarbon resources; 4. Dividends paid under the terms of...
Please join StudyMode to read the full document