Privatization of Iran Filling Stations Begins Next Month

EghtesadOnline: Plans to overhaul Iran's retail fuel market are expected to get underway next month with the privatization of several gas stations nationwide.

News ID: ۷۷۲۶۴۴

26 December 2016

"A total of 26 domestic companies have obtained the license to operate gas stations in Iran. They are expected to begin operations in a month," Mohammadreza Mazloumi, the commercial director of the National Iranian Oil Products Distribution Company said on Sunday, IRNA reported.

The price of gasoline and other fuels will remain unchanged, he said.

The official added that the Oil Ministry is evaluating the eligibility of five more companies and 20 companies have submitted requests for operating branded gas stations, Financial Tribune reported..

"We have not received any proposal from foreign companies, but they will be taken into consideration upon request," Mazloumi noted.

Reports circulated last year that Royal Dutch Shell and Total S.A. had acquired the rights to own and operate a total of 200 gas stations across Iran, but government officials denied  the reports.

There are 3,600 gas stations in Iran, of which 191, or roughly 5%, are owned and run by the government, Mazloumi said, adding without elaboration that "state-owned gas stations will also be handed over" to the brands.

The so-called 'commercialization plan' for gas stations is proceeding ahead after two rounds of tenders held this year for a total of 140 gas stations.

This month, 40 gas stations in 15 provinces, namely Markazi, West Azarbaijan, Fars and Tehran, were put out to tender in what was expected to raise at least $70 million.

In September, tenders for 100 gas stations in 25 provinces drew 333 bids with a total value of $112 million. The tendering process marked one of the largest privatization bids in the country. The Iranian economy is 85% state-owned.

Privatization of gas stations will help the NIOPDC, a subsidiary of the Oil Ministry, to gradually scale down its operational role and instead shift to supervisory position in the distribution of gasoline and other fuel products, according to the NIOPDC chief Mansour Riahi.

Naser Raeesi, head of the National Private Gas Station Owners Guild, has welcomed the move, stressing that it will lead to the construction of new gas stations by private-run brands and also raise service quality at the pumps.

A shortage of gas stations in Iran, particularly in the big cities, creates long queues of cars every day. According to reports, there is one gas station for every 7,500 people in the UK and one for every 2,600 people in the US. But according to the NIOPDC data, in Iran there is one gas station for 22,000 people.