Transparency initiative annual report

4.5. Transactions related to State-owned enterprises

The State Oil Company of Azerbaijan Republic (“SOCAR”) is an entity acting on behalf of the government to carry out its activities in the oil and gas industry. SOCAR carries out the exploration and development of oil and gas fields, production, processing and transportation of oil, gas and gas condincates, selling of oil, gas and oil-chemical products on domestic and foreign markets.

SOCAR acting on behalf of the Azerbaijan Republic within the PSA Framework obtaines state’s share of oil and gas in-kind from the participant of PSAs. The volume of oil and gas obtained by SOCAR from the contarcting companies in 2015 is indicated in the Table 17.
The state's share of the revenues from the sale of profit oil and gas is accumulated in the State Oil Fund of Azerbaijan and the relevant information is given in the Table 26. The information on transfer which is carried out by the State Oil Fund to the state budget is indicated in the Table 27.
Allocation of tax liabilities (profit tax, VAT, property tax, excise tax, income tax, price exchange and other taxes) occuring during SOCAR’s activity is calculated in accordance with appropriate legislation and is transfered to the State Treasury Department.
Under the state guarantee the Central Bank acts as a lender, the Azerbaijani banks act as a borrower and SOCAR acts as re-borrower of the loan. The Central Bank of the Republic of Azerbaijan, the Ministry of Finance of the Republic of Azerbaijan, SOCAR and Azerbaijan Banks sign an agreement which is guaranteed by the Ministry of Finance who acted on behalf of the Government.
The allocations made to the Government reflect the monetary invesment or funding by SOCAR to the state budget, separate government agencies and projects carried out by the government in accordance with the special regulations of the Government. Such kind of contributions are recognised as a reduction of capital. Non-monetary contributions are recognized in the carrying amount of the assets transferred. ⁸⁵