Transfers to budget from difference between export and internal oil prices hit $240 million in 2008

Azerbaijan, Baku, Jan, 21/ Trend , I. Khalilova/ In 2008, the State Oil Company of Azerbaijan (Socar) transferred 198, 990,500 manat ($247.3 million) to the state budget from the difference between the contract (export) price and domestic wholesale prices, the Taxes Ministry said.

Under a new mechanism introduced within the framework of correction of budget forecasts, Socar transferred 30 percent of this difference to the state budget as compared to 25 percent transferred earlier. This mechanism will remain in force in 2009 as well.

A total of 20 189,500 manat was transferred to the state budget in Dec., 1,719,000 manat - in Oct., 40,390,600 manat - in Sept., 11,907,100 manat in Aug. and 4, 007,100 manat in July.

The Finance Ministry attributes the changes in correlation to increase in revenues from the oil sector, whilst dramatic drop in transfers in Nov. is attributed to world oil prices.

On the backdrop of fall in demand, consumer countries, including the United States, China and Japan, have lost about 60 percent from oil prices since early 2008 and about 73 percent since Jun., when they reached record level - $147 per barrel. Oil prices dropped below $50 per barrel as compared to previous year.

The 2008 state budget envisaged transfer of 75 percent of oil revenues with prices exceeding the already existing $70 (previously the budget forecasts projected oil price at $50 per barrel) to the State Oil Fund of Azerbaijan (SOFAZ). Until 2008, the mechanism envisaged the assignments with the oil prices at from $40 to $50. In this case 50 percent had been transferred to SOCAR as additional assignments.

According to the 2008 forecasts, the oil sector was to provide 6.7 billion manat to state budget (taking into account the transfers from SOFAZ worth 3.8 billion manats), which made up 63.9 percent of total budget income. However, the calculations were carried out without taking into account the latest events in Georgia and the explosion at the Turkish part of Baku-Tbilisi-Ceyhan pipeline that led to a decline in oil exports. Despite this, income part of public budget exceeded forecasts (the budget was fulfilled at 102.7 percent). Therefore, one can expect anticipated assignments from the oil sector as SOFAZ made all necessary transfers last year.

On Jan. 21, the official exchange rate is 0.8045 manat to $1.

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