The State Oil Fund of the Republic of Azerbaijan (SOFAZ) celebrates its 20th anniversary today. SOFAZ was founded on December 29, 1999, as a core part of the national oil strategy developed as a result of the far-sighted policy of the national leader Heydar Aliyev, with the objective of efficiently managing the accumulated oil and gas revenues and saving them for future generations.
For the past two decades, SOFAZ has achieved outstanding results in its successful implementation of vision-driven objectives, effectively participated in financing strategically important, large-scale national and international socioeconomic projects, and has achieved high institutional development, and has gained reputation for its transparency in the global arena.
Having started with USD 271 million under management, SOFAZ’s assets have surpassed USD 40 billion this year for the very first time in its history. From the date of its inception until November 30, 2019, the Fund’s aggregate revenues have constituted roughly USD 158.4 billion, of which USD 151.5 billion has been accumulated from the sales of oil and gas, while USD 6.9 billion from managing the Fund’s assets.
From the accumulated inflows, SOFAZ transfers funds to the state budget, contributing to the maintenance of the macroeconomic stability and fiscal sustainability. The first funds from SOFAZ were directed at addressing the construction of temporary settlements for over a million refugees and internally displaced people forced to flee their native lands as a result of the Armenian-Azerbaijan Nagorno-Karabakh conflict. As promised by President Ilham Aliyev in 2003, all of the refugee camps were dismantled within a few years, and the people living there were relocated to the newly established housing units with the necessary infrastructure. In addition, SOFAZ has financed a variety of strategic socioeconomic projects such as the Baku-Tbilisi-Jeyhan Main Export Pipeline named after Heydar Aliyev, Oguz-Gabala-Baku water pipeline, the reconstruction of the Samur-Absheron irrigation system, the construction of the ‘Star’ Oil Refinery Complex and financing the government’s share in the “Southern Gas Corridor”. The ‘Baku-Tbilisi-Kars’ new railway - regarded as an economically efficient, fast, safe and reliable project initiated by President Ilham Aliyev - has also been financed by SOFAZ.
One of the main projects financed by SOFAZ, was the “State Program on the education of Azerbaijani youth abroad in 2007-2015”. This program is an embodiment of the goal put forward by President Ilham Aliyev “to turn black gold into human capital”. This government initiative has essentially provided an opportunity for over 3500 young Azerbaijanis to study in the world’s 32 leading universities. This is the Fund’s biggest investment in the future development of the country and the advancement of its human resources. Overall, SOFAZ has allocated USD 9.4 billion to the implementation of this programme.
One of the main duties of SOFAZ is the optimal, risk-based allocation of oil and gas revenues in order to transform them into a source of permanent income for the future generations. The cornerstone of the Fund’s activity in this direction is to build a global diversified portfolio with a long investment horizon. As of today, the assets of the Fund are invested in bonds, equity, real estate and gold, expressed in US dollars, Euros, British pounds and other currencies, in more than 50 countries all over the world.
Currently, through investments into public equity, SOFAZ owns shares in over 1,600 large-cap listed companies worldwide.
Within the framework of real estate investment, SOFAZ has made direct property acquisitions in Europe, Asia and the Pacific region in cities such as London, Moscow, Paris, Tokyo and Seoul.
SOFAZ - whose core principles are transparency and accountability - is currently internationally acclaimed and highly regarded by many well-known organizations across the globe. It is worth mentioning that, SOFAZ has been awarded the United Nations Public Service Award in the category of “Improving transparency, accountability, and responsiveness in the Public Service” in 2007. SOFAZ is the first governmental agency granted this prestigious award among the governmental institutions of the Eastern Europe and CIS countries.
As a sovereign wealth fund, SOFAZ has always been exceptionally regarded by international experts. SOFAZ has been placed among the top sovereign wealth funds in the Linaburg-Maduell transparency index, developed at the Sovereign Wealth Fund Institute. In addition, the Fund has ranked the 4th among 60 sovereign wealth funds in the fourth edition of the Sovereign Wealth Fund Transparency and Accountability scoreboard published by Peterson Institute for International Economics in 2016. SOFAZ has also been ranked 10th amongst the one hundred most impactful public investors, published by Sovereign Wealth Fund Institute.
SOFAZ will continue to ensure the sustainability of the new economic model designed by President Ilham Aliyev and contribute into the country’s development while remaining committed to its mission in the coming years.