CESD in Azerbaijan: $17 million oil money was “missed” in the SOFAZ Building Construction

18 May 2012.

One square metre in the new office of the State Oil Fund of Azerbaijan (SOFAZ) will cost $9,000, and it is to be the most expensive project in Baku. These are the results of monitoring of the consumption of funds for the new construction conducted by Center for Economic and Social Development (CESD) with support from Partnership for Transparency (PTF).

According to the monitoring, the total area of the 23-storied SOFAZ building is 13,000 m2. The preliminary estimated cost of the project, whose general contractor is a Belgian company NV Besix SA, is valued at 88 million manat ($113 million). Other interesting fact is that minimum number companies (only three companies) participated at the SOFAZ tender. They are Arabtec Construction LLC (UAE), N.V. Besix S.A (Belgium) and Adolf Lupp Gmbh+ CO KG (Germany).

State Oil Fund paid to Inter Art Etudes 26 million euro only for preparing construction financial documents which is several times higher than international standard costs. No explanations have been done by SOFAZ related to such huge amount payment. There is also discrepancy at SOFAZ reports. SOFAZ has early reported only 14 million manat ($18 million or 14.3 million euro) paid for preparing financial assessment then later the fund announced that 26 million euro spent for this job.

The monitoring also revealed a number of breaches of tender regulations. Moreover, it was found that in 2010, when the contractor still had not been selected, 20 million manat ($26 million) was allocated, of which 7 million manat ($9 million) was spent on a purpose not clarified.

In addition, CESD found that the remaining 13 million manat ($17 million) was simply “missed”.

According to Leila Aliyeva, the head of the monitoring group at the CESD, the center attempts to find answers to these questions and further monitoring will be conducted.