The budget for 2002 of the State Oil Fund of Azerbaijan (SOFAZ) was amended by a Decree of the President of Azerbaijan dated Oct 2002. The amendments, which were proposed by the Fund's Executive Director and supported by the Fund's Supervisory Board, were adopted in accordance with the budgetary regulations of the Fund and increased revenues of the Fund from 880.2 billion to 1180.2 billion manats and expenditures from 153.5 to 522.2 billion manats. Of the 368 billion manats increase in expenditure, 68 billion manats is to finance works in compliance with the Presidential Decrees No. 562 dated August 22, 2001, No.577 dated September 9, 2001 and No.700 dated May 13, 2002. The works involve construction of housing and related infrastructure for Azeri refugees and internally displaced persons suffering from Armenia's aggression against Azerbaijan. The remaining 300 billion manats are to be allocated for expenditures relating to financing, as per Presidential Decree No. 739 dated July 30, 2002, of the state's obligations in respect of the Baku-Tbilisi-Ceyhan (BTC) Main Export Pipeline (MEP) construction project.
The State Oil Company of Azerbaijan (SOCAR) is participating in the BTC MEP project through its special purpose subsidiary AzBTC Co., which is a 25 percent stakeholder in the BTC Company, a consortium of oil companies implementing the $3 billion MEP project. The participants including AzBTC Co. are to fund a 30 percent equity component with the remaining 70 percent to be raised from multilateral financial institutions, export credit agencies and commercial banks. The Ministry for Economic Development (MED) of Azerbaijan will acquire, on behalf of the Government of Azerbaijan, a stake of around 80 percent in AzBTC Co., while SOFAZ is to finance this acquisition and correspondingly MED's obligations in respect of AzBTC Co. and the BTC project. Dividends resulting from MED's share in AzBTC Co. will accumulate in SOFAZ.