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Has Azerigaz ever worked profitably?

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By May 1, 2021, the number of subscribers provided with natural gas in the country reached 2 million 358 thousand 910 units, announced the Azerigaz PA, SOCAR’s gas distribution division.

According to the information, 918,440 gas subscribers are located in Baku and 1,440,470 in the regions of Azerbaijan. That is, 38.93% of Azerigaz subscribers are located within the administrative border of the country’s capital.

Azerigaz also reports that 5,885 new subscribers from the population category were connected to the country’s gas distribution network in April this year. Of these, 3,995 are in Baku, Absheron and Sumgayit, and 1,890 are in the regions of the country. For 4 months of this year, 31,429 new gas subscribers were registered from the “population” category.

For years, the Azerigaz PA has been disclosing the same stereotyped information to the public, which is stated above. One gets the impression that this structure, apart from the population, no longer has other subscribers. Azerigaz does not disclose information on the number of subscribers of state structures (as if it is a state secret) and commercial organizations. As for the financial side of your business (buying, selling, ending the financial year with a profit or loss), nothing is known about this at all. The only thing is that SOCAR sometimes reports in its annual reports that the sale of gas on the domestic market at the established tariffs of the state is lower than it buys gas from other producing companies under PSA contracts.

Azerigaz merged with the State Oil Company of Azerbaijan on July 1, 2009. Why did the Government take such a step?  Before that, over five years, the government twice wrote off Azerigaz’s debts to the state (billions of dollars in debts, the collection rate for gas from subscribers was low, technical gas losses were at about 20%, the salary of employees of the gas sector was low. 

This caused the growth of corruption in the department and caused discontent especially among the “population” category). Sales prices for all categories of subscribers raised. However, all exactly after a certain time debts appeared again, and they grew rapidly. To solve this problem, the government decided to join Azerigaz to SOCAR. 

However, the problem itself has not been fundamentally resolved. In fact, SOCAR has dated its gas structure all these years. The state also continued to allocate money from the state budget for the gasification of the country.

Yes, in July 2020, at a government meeting, the President of Azerbaijan expressed his dissatisfaction with the fact that funds are still being allocated from the budget for drilling gas wells and for gasifying regions. However, over the past 10 months, the government has never discussed this issue.
What will happen next? On May 8, the President of Azerbaijan signed a decree on the change of the management of SOCAR. From now on, the Supervisory Board will be in charge of the development strategy (internal and external) of the State Oil Company. Most likely, this body will decide which way to develop the country’s gas economy. 

Caspian Barrel

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