631 State-Owned Assets on 2018-19 Privatization List

EghtesadOnline: Iranian Privatization Organization is set to sell stakes in 631 state-owned firms to the private sector later in the current fiscal year (March 2018-19), which is 87% more compared to the number of firms listed for privatization last year.

News ID: ۷۸۲۹۰۷

13 June 2018

Of the total figure for this year, the ownership of 194 public entities is to be fully transferred to private owners while 80% shares of the remaining 437 public enterprises are to be ceded.

"Over 280 of the listed companies actually remain from the previous fiscal year's list," the managing director of IPO said, adding that exchange-listed firms will have their shares offered on the stock exchange and the rest will be sold via tenders, Financial Tribune reported.

"We were coping with a new government swearing in and consequently waiting for new ministers well into last fiscal's third quarter. Therefore, last year's privatizations in effect started in late Aban (the Iranian month from Oct. 23-Nov. 21, 2017)," Mirali Ashraf Abdollah Pourihosseini was quoted as saying by the organization's public relations.

President Hassan Rouhani was reelected in May 2017 and his new Cabinet introduced new economy, industries, cooperatives and ICT ministers, among others.

The fiscal 2016-17 was set to be the last year for privatization, as the 10-year deadline introduced by the law came to an end. But the deadline was extended, this year and the last, as the sales proved more complicated than expected and a large number of assets remained unsold.

Pourihosseini believes that the privatization process is inherently long and complicated, and that "certain mechanisms and interference of unrelated officials" has further impeded the process.

What's more, many of the companies on the privatization list are either underperforming or posting losses, making it even harder to find buyers. In fact, IPO sometimes faces "pricing issues, as the value of some of these companies [and potential returns] is close to zero".

The Ministry of Agricultural Jihad has the highest number of assets up for sale this year with 398 companies, including insurance funds, silos and subsidiaries of Government Trading Corporation of Iran–a state-owned company specializing in the purchase, import and distribution of essential foodstuff. It is the lever for enforcing market controls.

The company is also in charge of maintaining the supply of wheat, rice, cooking oil and meat, as the country’s strategic reserve of essential commodities.

The Ministry of Energy follows with 129 companies, 96 of which are regional water and sewage companies and 25 are power plants.

Next up is the Oil Ministry with 28 firms up for privatization, made up of refineries, petrochemical plants and gas stations. There are big names here, such as Abadan Oil Refinery and Shazand Petrochemical Company with block sales reaching 80-100%.

The Ministry of Sports and Youth is a newcomer to the list with 26 sale-ready assets to be sold to the private sector. Dizin and Shemshak ski resorts can be seen on the list, as well as tennis courts, horseracing tracks and sports complexes.

Although low in the number of listed firms, the Ministry of Industries, Mining and Trade has some big names up for sale. The total number is 23, with four belonging to Iranian Mines and Mining Industries Development and Renovation Organization, including 100% stake in Azarbaijan and Mianeh steel, Iran Alumina Company, Iran Rolling Commercial Development Services Company and a 49% share in South Aluminum Corporation.

The Industrial Development and Renovation Organization of Iran has set up eight companies for sale, as the ministry itself is selling 11 companies, including a 16.46% share in Iranian Tobacco Company.

The Ministry of Economic and Finance Affairs follows with nine companies for privatization, followed by the Ministry of Roads and Urban Development with eight, Islamic Republic of Iran Broadcasting with four, the Presidential Office with three, the Central Bank of Iran with two and the Interior Ministry with one company for sale.