Iran Gov’t Forecast to Sell Property Worth $3b Farfetched

EghtesadOnline: The government says it expects to earn 400 trillion rials ($3 billion) in the next fiscal year that begins on March 20 -- a prediction many experts say is unrealistic at best.

News ID: ۷۸۵۲۲۱

07 January 2020

As per Note 12 of the outlines of next fiscal budget plan (March 2020-21), the figure is ten times higher than the earnings realized this year from the sale of the government’s unused and excess assets.

Through which methods or procedures, experts wonder, the government wants to secure this huge income while it was hardly able to generate 37 trillion rials ($284 million) this year, Financial Tribune reported.

Hadi Haqshenas is among economists who cast doubt on the government’s ambitious target to get rid of assets given the dire economic conditions.

The prices of property the government puts up for sale are usually so hefty and the conditions attached so daunting that few buyers come forward.

This is compounded by prerequisites the government imposes on potential buyers, Haqshenas said, referring to obligations that ban buyers from making changes to the organizational structure of the property they acquire.

In many cases the buyers are also not allowed to fire workers.

Divestiture of state-companies is backed by Article 44 of the Constitution that offers opportunities to private enterprise, promotes downsizing and curbs the bloated bureaucracy.

According to existing privatization laws and as per the same article, state-owned enterprises fall into three main groups.

The government is barred from ownership, investment and managerial posts in Group I. Likewise, the government is obliged to transfer 80% of the total firms in Group II to private, cooperative, public and nongovernmental organizations. Ownership, investment and management positions in Group III is the exclusive premise of the government.

Beyond Formalities

The new budget allows the government to sell its excess assets “without observing formalities”, a provision that is seen to facilitate the divestiture process.

However, Economy Minister Farhad Dejpasan said the government will use this facility only in

“special cases”.

He pointed to examples of companies that are to be offered on stock market, saying that in divesting such entities the government has to uphold formalities demanded by the Securities and Exchange Organization.

The government has plans to divest stakes in 18 companies. Assets on sale include a 20% stake in state-owned oil refineries in Tehran, Tabriz, Bandar Abbas, Esfahan, 17% in Tejarat Bank and Bank Mellat each, 18.3% in Bank Saderat Iran and 11.44% in Amin Reinsurance Company.

Other assets include 18.96% in Persian Gulf Petrochemical Industries Company, 12.05% in the National Iranian Copper Industry Company, 17.2% in Mobarakeh Steel Company,14.04% in Iran Khodro (IKCO), 23% in SAIPA, 40% in Pars National Agro-Industry and Animal Husbandry Company, and 13.02% in the National Investment Company of Iran.