Azerbaijan Government Views a Mechanism on Indirectly Funding FEC

Oil&Gas Materials 24 November 2006 16:50 (UTC +04:00)

Azerbaijan Finance Ministry is viewing a possibility on changing a mechanism on indirect funding of the fuel and energy complex of the country for 2007. Azer Bayramov, Deputy Azerbaijan Finance Minister told Trend that it was expected to be done without changing the volume of direct subsidies, which have been put out at the amount of 330 mln. AZN for the next year.

The above-mentioned amount has been released taking into consideration the current price on the gas being imported from Russia. Today, Azerbaijan is paying $110 per 1000 cubic meters to the Russian party.

According to Mr. Bayramov, changing the funding mechanism envisages changing the source that will allow Azerenerji JSC to obtain gas for further generating it into electric energy.

Presently, different alternatives are being under consideration. Gas produced from gas condensate field Shahdaniz is one of the alternatives, said the Deputy Minister.

Due to the reconsideration of forecasts of State Budget 2006, indirect subsidies for Azernerji were extended from 103,1 mln. AZN up to 438,5 mln. The necessity for correction is linked with the increase in the price of the gas that is being imported from Russia. The subsidy was released at the price of $60 per 1000 cubic meters, and then the gas price went up to $110.