The Iranian Privatization Organization is obliged to sell shares in refineries and three other companies worth 435 trillion rials ($1.72 billion) to Bank Mellat, Bank Saderat Iran and Tejarat Bank, according to the government website dolat.ir.
The shares are in Tehran Oil Refining Company, Esfahan Oil Refining Company, Tabriz Oil Refining Company and Bandar Abbas Oil Refining Company plus the National Investment Company, Heavy Equipment Production Company (HEPCO) and Iran Transfo company.
It is said that the aim is to procure funds for the parliament-backed scheme to pay cash subsidies to low-income households and reimburse part of the government debt to the three banks.
Last month, the Majlis passed a bill obliging the government to make available 300,000 trillion rials ($1.2b) in direct subsidies to the neediest. The plan was initially rejected by the Guardian Council, which ensures laws are in line with the Islamic Republic Constitution and the Sharia, on the grounds that the resources to fund the program were not clear.
However, the Guardians endorsed the bill after MPs explained the funding mechanism: selling government shares in state-owned companies.
As per the initial plan, the government had to make monthly payments of 1.2 million rials ($4.4) to 20 million people in the three lowest income deciles covered by humanitarian and welfare organizations. In addition 600,000 rials ($2.2) is to be paid to 40 million people of modest means in other income deciles before the fiscal year ends in March.
The plan was later modified by the government and its scope was limited in terms of those eligible and the amount to be paid.
As per the Cabinet decision, lenders acquiring the shares must deposit 145 trillion rials ($580 million) with the government to be paid to those eligible. Payments are supposed to be made in four installments.
In addition, the share sale is intended to partly reimburse government debt worth 290 trillion rials ($1.16b) to the three lenders.
SSO Debt Repaid
In a similar move in July, the government repaid 320 trillion rials ($1.3b) in debt to the Social Security Organization by transferring shares to the organization.
The SSO is the largest social insurance organization in Iran which provides coverage to wage-earners and salaried workers as well as voluntary coverage to self-employed persons. It reportedly covers 50 million people.
Divested assets included shares in Aluminum Corporation (SALCO), Damavand Petrochemical Company, Heavy HEPCO, Iran Tourism Development Corporation, Imam Khomeini Oil Refining Company of Shazand, Jajarm Alumina Plant, Zarshouran Gold Mines, the Mining Industries Development Company and Machine Sazi Tabriz Group and the Iranian Tobacco Company.
In September, the government tried to cede shares in four refineries via an exchange-traded fund but managed sell only 21% of the total.
As per available data 4 million people took part in the subscription for ETF units and sold 130 trillion rials ($520m) of the units. The government wanted to divest shares worth 600 trillion rials ($2.4 billion) in four refineries.