$2b Worth of Iran Gov’t Assets Slated for Privatization

EghtesadOnline: The Iranian Privatization Organization is gearing up for its biggest privatization initiative so far this fiscal year (March 21, 2017-18) as over 90 trillion rials ($2 billion) worth of public assets are to be put up for sale on March 12, an advisor to IPO chief said.

News ID: ۷۸۲۰۶۱

14 March 2018

“A majority of shares are fresh and most of the companies have never been put up for sale before,” Jafar Sobhani was also quoted as saying by IRNA.

Buyers have until March 11 to submit their offers to the organization.

The sales include a 100% stake in Moghan Agro, Industry & Livestock Company priced at about 22 trillion rials ($488.88 million), sold 10% in cash and the rest in eight-year installments, Financial Tribune reported.

Next is the government’s 40% share in Pars Agricultural Inc. with the base price of 2.2 trillion rials ($48.88 million), 10% of which will be paid in cash and the rest in six-year installments.

IPO’s privatizations in the energy sector include a 100% stake in Isfahan Power Plant valued at 21.8 trillion rials ($484.44 million), Isfahan Power Plant Management Company valued at 45 billion rials ($1 million), Besat Power Plant valued at 2.4 trillion rials ($53.33 million), Khorasan Power Plant valued at 15 trillion rials ($333.33 million) and Sahand Power Plant valued at 16.4 trillion rials ($364.44 million).

There are also companies operating in construction and development sectors on the privatization list, including Samen Development and Housing Company with a base price of 1 trillion rials ($22.22 million) and Soil and Water Engineering Services Company valued at 5.6 trillion rials ($124.44 million).

Six gas stations will be sold with a total value of 3.6 trillion rials ($80 million). Two of them are located in Mazandaran Province and four others in West Azarbaijan, Isfahan, Tehran and Khuzestan provinces.

Other sales include Isfahan’s old slaughterhouse, Shushtar’s silo no. 4, Ardebil’s silo no. 7 and other silos valued at an aggregate of 3 trillion rials ($66.6 million).

The government sold 4.54 trillion rials ($98.27 million) worth of public companies’ shares to the private sector in the first 10 months of the current Iranian year (March 21-Jan. 20), Mehr News Agency reported.

About 3.95 trillion ($86.3 million) of the total figure were sold via tenders, while 102 billion rials ($2.28 million) were privatized on the capital market.

Iran Privatization Organization listed 337 public companies for their shares to be transferred in the ongoing fiscal year, out of which the ownership of 230 public entities was to be fully transferred to private owners. The remaining 107 public enterprises were to see 80% of their shares transferred while 20% were to remain in the hands of the state.

> Challenges to "Real" Privatization

One of the main hurdles in the way of "real" privatization in Iran is the emergence of semi-private companies during the flawed privatization process in the not-too-distant past.

The country’s private sector has always criticized the activities of quasi-state companies and the public sector has failed to clarify the ambiguities associated with their activities despite multiple promises.

The quasi-state sector consists of businesses registered as private entities under Iran’s Commerce Code but in reality are either wholly or partially owned by actors like the military, foundations and pension funds.

Following the Joint Comprehensive Plan of Action with world powers, quasi-state companies were the main winners of foreign investments and, likewise, drew the ire of private sector.

Apparently, in their showdown with the quasi-state companies, economic operators of the private sector were not strong enough to grab the new opportunities opened by the nuclear deal.

According to a recent report by the research center of Iran Chamber of Commerce, Industries, Mines and Agriculture, rampant corruption, unfavorable business environment, economic instability and inefficient ownership rights are the four main reasons behind the failure of privatization in the country.

Fluctuations of economic indices, including inflation and foreign exchange rates, also discourage the private sector from assuming responsibility.