Sabir Dam & Water Works Construction Company is currently operating three of the country’s largest development projects, namely Karaj Metro Project and Chamshir and Kouhrang dams in Kohgilouyeh-Boyerahmad and Chaharmahal-Bakhtiari provinces respectively.
Karaj Metro Project has been in the making for the past 11 years, with most of the delay reportedly linked to financial disagreements between the project owner, namely Karaj City Council, and contractor, Sabir, according to Financial Tribune.
“About 7 trillion rials ($166.6 million) have been invested in the metro project in the last [fiscal] year (March 21, 2017-18), and Phase I’s construction requires about 20 trillion rials ($476.19 million) more,” said managing director of Shasta, Morteza Lotfi, during a meeting with the head of Management and Planning Organization, Mohammad Baqer Nobakht.
To say that Sabir and Karaj City Council’s business relationship has been rocky is an understatement. Sabir has repeatedly accused the council of delaying payments, withholding new funds and insisting on too cheap a foreign exchange rate despite the past decade’s fluctuations.
The council, on the other hand, insists that Sabir has defied the contract terms on numerous occasions, holding that the payment was fixed in the contract and is not liable to change. The councilors were so infuriated that at one point they tried to one-sidedly terminate the deal and oust Sabir.
The termination was not approved by the government, however, and the two are still waiting for someone to solve the problem.
More Problems With Sabir
The same goes for the 2.3-billion-square-meter Chamshir Dam Project, the country’s second-largest dam, being built by Sabir. With the Energy Ministry as the project owner, it has been in the making since the fiscal 2007-8 and has so far only progressed by about 40%.
“Lack of sufficient funds” is again the keywords here, with deputy project manager, Mohammad Reza Fazel, telling IRNA that 8 trillion rials ($190.47 million) in foreign credit have so far been invested in the project.
“According to Sabir’s estimates, the allocation of 2 trillion rials ($47.61 million) this year by the government will boost its progress by another 30%,” said Lotfi.
There’s drama surrounding this project, too. For starters, ISNA reported in February that about 650 of Sabir’s 1,100 workers at Chamshir had not been paid anything for six months, leading to workers staging protests at Gachsaran County. Farmers downstream are also impatiently waiting for the dam’s completion, with drought destabilizing the industry in many parts of Kohgilouyeh-Boyerahmad.
Chaharmahal-Bakhtiari and Isfahan provinces’ farmers are also looking forward to the Kouhrang dam project, which was initiated during the fiscal 2009-10 in an 870-billion-rial ($20.7 million) deal between Sabir and Isfahan Regional Water Organization.
Kouhrang has only progressed by about 26% to date, according to Lotfi, with insufficient funds and sudden changes to project design by the Energy Ministry and Department of Environment pointed to as the roots of the delay. It needs about 4 trillion rials ($95.23 million) to go forward and finish in an estimated 18 months.
On top of all that, Lotfi still had more to ask. He asked Nobakht for 1 trillion ($23.8 million) and 800 billion rials ($19 million) respectively for rebuilding and renovating Iran Wood and Paper Industries and Asalem Wood Industry.
The two Gilan-based companies are some of Iran’s oldest, the ownership of which was ceded to Shasta as part of the previous administration’s debt settlement scheme. They have tanked in recent years and become a financial burden for Shasta.
Why Turn to Gov’t for Help?
Shasta controls nine holdings in a wide range of sectors, including petrochemicals, pharmaceuticals, cement, transportation and finance. These holdings, in turn, manage about 200 subsidiaries, 1,000 board members and 350 trillion rials ($8.33 billion) of assets.
Shasta’s Sadr Tamin Holding, for instance, has extensive stakes in 18 steel and mining companies, with giants such as Mobarakeh and Khouzestan steel companies on its portfolio, according to Ssic.ir.
The portfolio’s size, however, does not guarantee its performance and profitability.
“Shasta acquired more than 90% of its assets as a result of the government’s debt settlement and 70% of them are either running at losses or underperforming. The only returns we get are from the 30% we have established on our own,” said Lotfi back in October.
SSIC’s gargantuan size is in fact due to the policies of the ninth and 10th administration led by former president, Mahmoud Ahmadinejad, which gave the holding stakes in state-owned companies in lieu of its debts. The companies, already poorly run, were forced on Shasta at arbitrary prices.
According to Lotfi, the government is over 1 quadrillion rials ($25.7 billion) in debt to the Social Security Organization. The number has surged from 60 trillion rials ($1.54 billion) in the past decade. This is while SSO has to pay about 750 trillion rials ($19.2 billion) in pension every year, with a chunk of it coming out of SSIC’s revenues.
Shasta knows that the toxic assets need to go and has recently vowed to sell at least 130 of its total subsidiaries “to better manage and invest workers’ assets”, Lotfi said.
Its nine holdings are also set to shrink to five, as it limits the scope of its investments.
The holding is yet to go beyond announcing its readiness to sell, however, as no date and not even the companies’ names have been disclosed. And even if sales do go through, whether there will be buyers for these loss-ridden assets remain to be seen.