$7.5 Billion Allocated to Unfinished Projects

EghtesadOnline: In the budget bill for the upcoming Iranian year (to start March 21, 2017), the government has earmarked 300 trillion rials ($7.5 billion at market exchange rate) for the completion of unfinished development projects.

News ID: ۷۳۹۳۲۸

21 January 2017

“The government has allocated this sum for a total of 2,700 unfinished projects,” Ali Asghar Yousefnejad, a member of Majlis Presiding Board, was quoted as saying by IRNA.

“Based on estimates in next year’s budget, about 49% of the government’s overall development budget are allotted to unfinished projects.”

According to President Hassan Rouhani, the budget bill for the upcoming fiscal year submitted by the government to parliament early December stands at over $97 billion, of which more than $15 billion have been put aside for investment in "feasible government projects".

According to Yousefnejad, development spending in the next budget, which is estimated at 620 trillion rials ($15.5 billion), is 9% more compared to the current year’s budget.

“Overall, development spending accounts for 20% of next year’s budget,” Financial Tribune quoted him as saying.

The lingering unfinished projects are typically funded by the government as well as the National Development Fund of Iran—a sovereign wealth fund that receives a fraction of the country’s oil revenues—commercial banks and private contractors.

Deputy minister of roads and urban development, Amir Amini, said the ministry needs 1.63 quadrillion rials (over $40 billion) to complete all the major unfinished projects in the transportation sector. These projects include more than $21 billion worth of rail projects at different stages of progress, as well as $19 billion worth of projects related to roads.

The Construction and Development of Transportation Infrastructures Company has estimated that the company needs 1.4 quadrillion rials (over $35 billion) to finish its underway projects.

Affiliated to the Ministry of Roads and Urban Development, the company is tasked with devising policies and managing projects regarding transportation infrastructures.

If $1-1.2 billion are allocated annually, it will take more than 35 years to complete all the projects, according to chief executive of CDTI, Kheirollah Khademi.

Mohsen Bahrami, the head of Trade Facilitation and Export Promotion Commission at Tehran Chamber of Commerce, Industries, Mines and Agriculture, said the more the unfinished projects are delayed, the faster their costs grow in line with the inflation rate.

“Most of these projects are not economical. Strict measures need to be taken,” he wrote in the Persian economic monthly Ayandeh Negar.

“Some of these projects are in very initial stages and have not even entered the construction phase. Those deemed uneconomical must be cancelled regardless of the investments made thus far.”