As per the decision, NDFI share from the export of crude oil and natural gas is 40% in fiscal 2022-23, according to the parliamentary news website ICANA.
In the initial draft budget, the government had proposed to deposit 20% of the revenue from such exports.
The NDFI was founded on 2011. Its share of oil revenue was then set at 20 percent and increase 3% every year. However, the former government apparently was unable to do so.
Annual increase in NDFI share is also mentioned in the Sixth Five-Year Economic Development Plan.
Based on initial projections, NDFI share from oil export is 1,370 trillion rials ($5.2 billion). With the amendment in the budget bill, that amount should increase.
To compensate the impact on government revenue because of the planned NDFI share and maintain a balance between its income and expenditure, head of Majlis Joint Commission Hamidreza Hajibabaee said the legislature has raised the oil export revenue projection for next year.
“The commission made two changes to the initial projection. First, the price of crude oil has been raised from $60 to $70 a barrel,” the MP said, adding that the higher rate is in conformity with international crude prices.
In the second amendment, crude oil export has been set at 1.4 million barrels per day, instead of 1.2 million. Hajibabaee, said the government had welcomed both proposals.
In the provisions outlined in the initial bill, the government expected to earn 3,818 trillion rials ($14.6 billion) by selling 1.2mbpd in fiscal 2022-23. The amount accounted for about a quarter of the general budget.
Due to the shrinking oil revenues arising from the 2018 US sanctions, less money has gone into the NDFI while the government(s) have increasingly tapped into the fund to plug the gaping holes in the national budget.
The fund was initially founded to save a percentage of earnings from oil and gas sales for the welfare of future generations.
However, experts and think tanks say that the dysfunctional economic structure, politico-economic challenges and plunging forex income have made a bad situation worse.
The fund lends to nongovernment public sector, private firms and cooperatives in need when government revenues are low, namely during low crude oil prices.
In an earlier report on the sovereign wealth, the Majlis Research Center, the influential parliamentary think tank, said that violation of rules has transformed the sovereign fund into a “shock absorber” for budget deficits.