Private Investment Needed to Implement Sports Projects

EghtesadOnline: The Ministry of Sports and Youth is banking on the private sector to help complete its under-construction sport infrastructures due to the government’s tight budget.

News ID: ۷۷۳۲۳۹

17 January 2017

“The ministry is planning to attract 2.5 trillion rials ($62 million at market exchange rate) for 232 construction projects in the sports sector,” an official with the SportS Ministry’s Projects and Plans Office, Farzaneh Shamsdoust, told Financial Tribune.

“These include 71 national and 161 provincial projects,” she said.

As of the beginning of the current Iranian year (started March 20, 2016), the ministry has been able to sign 25 contracts worth 253 billion rials ($6.32 million) with private investors, which roughly meets 10% of the target, Financial Tribune reported.

The move is in line with a law ratified mid-summer last year, which tasks the Sports Ministry with attracting private investors to participate in the development of sports infrastructures.

So far, most of the construction projects in the sports sector have been carried out by the government, using the administration’s financial resources.

The government is facing a budget deficit, driven on the one hand by a sharp fall in oil price, which diminished Iran’s oil revenues, and years of sanctions imposed over Iran’s nuclear program on the other.

Iran and the world powers implemented a landmark deal in January last year to resolve the dispute by scaling down Iran’s nuclear activities in exchange for the removal of sanctions.

This is expected to open the gates to an inflow of foreign capital, while paving the way for the government to sell more oil and increase its revenues, to be able to make up for years of underinvestment in various sectors.

Experts believe Iran’s sports infrastructures are underdeveloped, just like in many other fields whose expansion might be more of a priority in oil and transportation sectors.

Private sector participation is vital to prevent the sports sector from further lagging behind.

The listed projects, which mostly require small-scale investments and are not attractive to international investors, are different from those the ministry is planning to carry out using foreign investment.

Development and Maintenance of Sport Places Company, an affiliate of the Sports Ministry, has defined projects, each costing more than $3.5 million in foreign financing.

To properly introduce its projects to private sector investors, the ministry has set up a stand in the 15th International Exhibition of Sports, Sporting Goods and Equipment, titled “Sportex 2017” in Tehran, which opened on January 14 and concludes today.

Some 110 companies, including 90 domestic and 20 businesses from Germany, Spain, France, Switzerland, Japan, Kuwait, Indonesia, Britain, Bulgaria, the Netherlands, South Korea, China, Turkey, Russia and Italy, have participated in the event. The number of participants shows a 100% rise compared with the previous year.

The event is organized by Iran International Exhibitions Company, in cooperation with the Ministry of Sports and Youth and Trade Promotion Organization of Iran.