Iran Water Industry Counting the Cost of US Sanctions

Grappling with rapidly declining water resources, persistent drought and unusually high consumption, the government, with the help of the private sector, is stepping up efforts to modernize the ageing water infrastructure, build new treatment facilities and promote advanced farming systems.

Local companies faced huge barriers in interacting with foreign firms when it comes to importing equipment and parts, and as the last resort turned to local engineers and manufacturers.

However, domestic production too has been negatively affected by the US sanctions because some sensitive raw material to manufacture parts and components used in the industry cannot be imported due to the embargo, Financial Tribune reported.

Without the presence of major international players in Iran, the market is filled with Chinese products with questionable quality. As such, without access to quality raw material, the final domestic product may not be as good as its foreign counterpart.

The US withdrew last year from the 2015 nuclear deal Iran signed with six world powers and re-imposed sanctions on the country.

The 15th edition of the exhibition, also known as Watex, concluded Thursday at Tehran's International Fairground.

It hosted 230 domestic and 13 foreign companies (or their local representatives) from Italy, Germany, Hungary, China, Turkey and Taiwan.

Although the number of knowledge-based companies (and startups) had a 7-fold increase, it was much less crowded compared to previous events. 

The shadow of American hostility and provocations were conspicuous by the weak absence of foreign manufactures and exhibitors.

 

 

China’s Interest

One of the participants was Shandong Chemichase Chemical Company from China, which manufactures water treatment products.

Speaking to the Financial Tribune, Eric Yi, the sales manager, said: “This is the first time we have a booth but we have been present in Iran for many years and are active in diverse sectors, including the water industry”.

Regarding the impact of sanctions on their presence in Iran, he said: “Sanctions have caused us trouble… yet we have found ways to keep doing business here”.

He said cooperating with Iranians was profitable for his company. “There are many opportunities for our company here and we will continue working in Iran in future”.

 

 

Domestic Production

Another attendee was the Iranian company Atieh Cavosh Eftekhar – an exclusive agent of Taiwan’s Easywell.

The Iranian firm, which used to import water purifiers and filters for water treatment, now has its own production and assembly line. 

“Fluctuations in the currency market and sanctions have created many problems regarding cooperation with Easywell to the point that we decided to turn to domestic production,” the sales manager Nafiseh Haghighat Javan told the Tribune.

Regarding local products she made an interesting point. “Truth be said, no local manufacturer can claim he/she makes all the equipment and devices inside the country. Iran so far does not have the technology for making all the parts,” she noted.

Appreciating the efforts of local units and petrochemical firms, which produce parts and the raw materials used in the body of water purifiers, she said that their products “have the necessary standard.”

“However, regarding some raw materials used inside the filters, regrettably domestic productions do not meet the global standards,” Haghighat Javan rued.

Some materials are not produced locally and should be imported. Under the sanctions regime, quality products are either not accessible or prices are way too high,” she said.

“We are compelled to purchase materials with lower quality and prices and this means the final product loses some quality,” Haghighat Javan said.

Business with Taiwan is not possible at the moment. Due to the tough new sanctions, Taiwan cannot export goods to Iran. If it does, it will face financial and political issues, she concurred.

“We have been cooperating with Easywell for 10 years now. We started imports from Taiwan with two containers and after some years, the number rose to 32 containers. However, imports have fallen low and reached the same two containers as in the past.” 

Besides the sanctions, importers have problems inside the country as well. “Our last incoming container was not cleared by the Iran Customs Administration until we paid $8,000 as demurrage, which was more than the profit we had anticipated from the sale of our products,” she said.

 

 

Low Quality

Ab Azma Instruments was another company at the fair, which once had exclusive agency rights from some German and Japanese companies.

“After the sanctions were imposed, we could not continue cooperation and decided to focus on domestic manufactures,” said Shahin Zarringhabai, the sales manager.

“However, we are still working with the German company Optek and provide some customers like power plants and petrochemical firm with German equipment,” he said.

The company produces equipment for water quality analysis to ensure that the quality of treated wastewater is at acceptable levels.

On domestic products, Zarringhabai said: “We cannot buy electrical parts from the US or Japan and have access only to Chinese parts. Honestly speaking, the final product is not as accurate as it should be. However, the price is more competitive”.

Turkey’s Haus Centrifuge Technologies also took part in the annual event. 

It manufactures decanter centrifuges used in separation of solid-liquid or suspensions in petrochemicals and refineries and water and wastewater treatment companies.

Haus’s products are manufactured under a German license. 

“Sanctions have affected the company’s presence in the Iranian market, but it has not cut off ties with Iran,” Yasaman Rezaei, from the sales department, said.

Watex 2019 displayed advanced technologies and innovative products in the field of water and wastewater including water filtration, sweetening systems, automation solutions, and measuring equipment.