Iran Economy Update
Issue 91/2017
TUESDAY OCTOBER 17TH
Korea minister met Iranian ministers of Petroleum, Road and Energy
The visiting Korean minister of Land, Infrastructure and Transport Kim Hyun-mee met with the Iranian minister of Road &
Urban Development Abbas Akhundi, Minister of Petroleum Bijan Zangeneh, and Caretaker of the Energy Ministry Sattar Mahmoudi, the Iranian press reported today. The IRIB news (Iranian state TV) wrote that a delegation comparing representatives of Korean companies including Samsung and Hyundai are accompanying the Korean minister.
...energy-related discussion...
In his meeting with the Korean minister, Sattar Mahmoudi said efficient thermal power plants, smart grids, energy efficiency, industrial batteries, renewable energies, and joint cooperation in third countries are among the areas the two countries can cooperate. Water resources management, dams’ security, improving functioning of water treatment plants, research and standard training are among the areas the two sides have agreed to cooperate, added Mahmoudi, according to the IRIB. (See some pictures here)
In this meeting, Mohammadreza Reza- Zadeh, managing director of the Iran Water
& Power Resourced Development Co.
requested the support of the Korean government in implementing water and power projects in Iran. He asked the Korean government to give priority in extending line of credit for the $1.8 billion project for the construction of the Bakhtiary Dam and power plant, to be built jointly by Iran, Japan and Korea. He named Karun 2 dam and power plant as another project that will be carried out in B.O.T. form for which a Korean company has won the tender.
The Energy ministry’s official website has published some details of the talks between the Korean and Iranian energy officials.
Houshang Falahatian, deputy minister for electricity affairs told the Korean delegations that in the past three years, several talks in BOO investment have been held with Korean companies like Hyundai, Daelim and KEPCO and a number of the Iranian Energy ministry experts have visited Korea to attend training courses. He said the two countries have also had good negotiations in “smart networks” and that the Korean companies are already implementing a pilot project in the Hormoz Island and smart electricity distribution meters are being installed. He said that also an electricity peak-clipping and load shifting project in the national grid is being implemented.
Falahatian said if the Korean companies are interested in investment in establishing combined cycle power plant in Iran, they need to declare their interest at the earliest possible time. Falahatian said South Korean companies have welcomed investment in Iran’s renewable sector and the Renewable Energy & Energy Efficiency Organization of Iran (known as SATBA) is ready to have cooperation with them and receive new technologies in hydraulic, solar, wind, and waste-to-energy plants. He said Iran plans establishing 1,000 MW renewable plants annually and is ready to have cooperation in this regard with Korea.
SATBA President Mohammad Sadegh- Zadeh was another senior Iranian energy official who was present at this meeting. He said the pace of developing renewable plants has been accelerated in Iran in recent years. He said the plants built by Germany, UK, and Italy are currently operational in Iran and Korean companies have entered in this sector with a delay but are quickly compensating their delays. The
first solar plant that has been built in North Khorasan Province will come on stream next month, added Sadegh-Zadeh.
...talks with Road & Urban development minister...
The Korean minister also met with her Iranian counterpart Abbas Akhundi on Monday and discussed ways of cooperation and investment of Korean companies in Iranian rail, air, and road transport, logistic, housing and urban development, as well as the projects under construction by the Korean companies in Iran. According to IRNA, in this meeting the two sides agreed to hold joint cooperation committees between their ministries before the Joint Economic Cooperation Commission which is scheduled to be held on November 15th.
After meeting with his Korean counterpart, Abbas Akhundi told the reporters that the Iranian ministry of Road & Urban Development and Korean ministry of Land, Infrastructure & Transport are very similar in terms of their structures as both are tasked with housing and road issues. He said the two ministries agreed to form joint committees to make decisions to accelerate the pace of implementing projects. Akhundi said in the rail sector, the construction and development of the Isfahan-Ahvaz, the purchase of railbus, and investment in Iranian airports were discussed, and in the urban development, the issue of smart cities was raised.
Kim Hyun-mee expressed satisfaction with her discussions with Abbas Akhundi and said at the end of the meeting, the formation of operational committees in Seoul at the level of deputy ministers was decided by the two sides.
IRIB has published more details about the agreements of the two ministers. “Railways, financing rail line projects by Korea, holding training courses on airport issues, smart cities, integrated ticket issuing systems, investment of Korean companies in airport and infrastructure projects, and launching
Tehran-Seoul direct flight were among the issued agreed by the two sides.”
IRNA quoted Ms. Hyun-mee as saying that her government has asked the Korean companies to play a more effective role in Iranian cultural and social roles. She made the remarks during a one-day seminar on the UNESCO opportunities for partnership in Iran in cooperation with Korea companies, and expressed satisfaction that this conference is held concurrent with the 55th anniversary of the commencement of Iran-Korea diplomatic relations. She encouraged Korean companies not to merely focus on gaining economic benefits in their business in Iran and instead, help promoting economic culture in Iran. IRNA wrote that the one-day seminar on UNESCO partnership in Iran in cooperation with Korean companies was held on Monday at Parsian Evin Hotel and was participated by a number of UNESCO regional officials in Tehran and a number of Korean economic players in this country.
The seminar was kicked off on Monday with the inauguration speeches of Director and Representative UNESCO Tehran Cluster Office Esther Kuisch Laroche, Korean Minister of Land, Infrastructure & Transport Kim Hyun-mee, and Korean Ambassador to Tehran Kim Seung-Ho. The IRIB, IRNA the Energy ministry’s official website, Mehr and ILNA have been the major Iranian news agencies that covered the news of the visit of the Korean minister to Iran.
...and oil/condensate sale discussions...
During her second day stay in Tehran, Ms.
Kim Hyun-mee met with Petroleum Minister Bijan Zangeneh on Tuesday morning. Mehr news agency quoted Zangeneh as saying that oil and condensate trade and the way for paying the proceeds was the main issue he discussed with the Korean minister. In regards to the problem in payment of the proceeds, said the minister, a delegation from Iran will visit Korea soon. He said the Korean companies have already shown interest in participating in Iranian oil projects and the Korean government has allocated a
$20-billion worth line of credit for the operations of Korean companies in Iran, which is a “good” backup. “In our meeting, we stressed that the contribution of Iranian companies in the projects should be high,”
added the minister. Zangeneh also said that long term importation of Iranian LNG was another issue the two sides discussed, and added that investment of Korean companies in Iranian oil, gas and petrochemical sectors was discussed and an “agreement in principle” was achieved in this regard.
“Relations with Korea are of long-term nature and the two sides are willing to develop them,” said the Iranian minister, according to Mehr news.
“Currently, about 120,000 barrels per day of crude oil and most of the coutnry’s condensates are being exported to Korea and if the payment issues are not resolved, we have to change our policy of selling oil/condensate to this country,” said Zangeneh. The minister explained that it is not the matter of debt owed but Korea
“Rather, it is the method of paying the currency”. Korea currently pays a segment of its payment in won but we are willing to receive more in euros.
Iran is discussing 10-billion euro water/electricity deals with world companies
Caretaker of Iran’s Energy Ministry Sattar Mahmoudi said Iran is currently negotiating 10-billion-euro water and electricity projects with Iranian private sector and foreign companies, Tasnim news agency reported on Monday. Mahmoudi made the remarks on the sidelines of the 13th International Water & Wastewater Exhibition (16-19 Oct).
He said the number of European countries attending this exhibition has increased compared with the previous events, as among the 20 foreign companies participating, half are coming from the European or northern American regions.
The 13th International Water & Wastewater Exhibition is held with participation of 258 domestic and 105 foreign companies from
Italy, Turkey, Germany, Azerbaijan, Hungary, China, France, Spain, Denmark, South Korea, India, Switzerland, Austria, UK, Sweden, Japan, Canada, Belgium, Island and the Republic of Czech. In this exhibition, different types of pipes, polymer fittings, treatment and filtration, water desalination systems, valves, pipes and fittings, automation and instrumentation systems, metric systems, laboratory equipment and the latest water and wastewater production and equipment are being showcased.
Russian EXIAR signs finance agreement with CBI
The front page of the Monday issue of the daily Donyay-e Eghtesad focused on a finance agreement signed between the Russian Agency for Export Credit and Investment Insurance (EXIAR) and the Iranian central bank on financing Iranian private and public development projects.
The article titled “The Russian counterattack against Trump’s target” argues that “Just two days after Trump’s anti-Iran rhetoric, the first finance agreement was signed between Iran and Russia.” This contract is of importance from two political and economic standpoints, wrote the daily. “First off, the Russian companies have shown interest in opening line of credit for Iran in spite of the Trumps threats.” Secondly and from an economic vantage point, this contract is a new development because in this finance agreement, Iran has reached agreement with an [export] credit institute instead of signing a contract with a bank, which indicates that the contract will have sufficient implementation guarantees.
According to Donyay-e Eghtesad, the main stakeholders of Russian EXIAR are the Vnesheconombank (VEB) Bank and the state export support institution Russian Export Center.
...Parliament speaker Ali Larijani discussed developing economic ties with Russia In a related development, Parliament Speaker Ali Larijani on Monday defended
bolstering economic relations with Russia saying “It is important for us to, along with developing political ties, we have our economic relations expanded as well.”
According to Mehr news, Larijani made the remarks after his return from Russia to attend the 137th Assembly of the Inter- Parliamentary Union (IPU). Larijani said in his meeting with Russian President Vladimir Putin, they discussed “important contracts and projects.”
Depositors of bankrupt unlicensed CFIs continue protests in Iranians streets On Monday, the daily Shargh published a report on the depositors of a number of the Credit & Financial Institutes (CFI) that continue staging rallies in different cities across the country demanding their money back. Caspian is one among other CFIs in Iran that are usually affiliate with religious/military entities that could not be challenged by the CBI in spite of not being authorized by the coutnry’s banking policy- makers. According to different reports across the country, the depositors who believe they’ve been plundered by the credit institutes and the CBI, carry banners and placards and are shrouded in a symbolic sign to show they have no fear of death.
“I am one of the depositors. Paying the principle and the accrued 27 month of interest of the deposit, compensation of the damages I’ve incurred, and punishment of the officials who were responsible for this outcome are among the demand of all the depositors, and this problem should be addressed as soon as possible,” Shargh quoted one of the protesters in Tehran in front of the Judiciary building as saying. The daily wrote that the Caspian CFI depositors protesting in different cities have grown in number as the depositors of other bankrupt institutes have joined them. The daily wrote that the protesters have planned to continue their gathering until the final victory, and plan to gather in front of the United Nations building in Tehran as well. Shargh wrote that the unlicensed financial and credit institutions—that include a massive network
of branches across the country-- are possessing more than 15 percent of the coutnry’s total liquidity. There are hundreds of similar financial and credit institutes that although have not been authorized and certified by the CBI as the coutnry’s highest financial authority, they’ve managed to attract huge money as they actually pay a higher interest on savings by charging higher fees on loans.
Shargh censures the depositors of the credit institutes who disregarded the frequent warnings of the CBI for not depositing their money in unlicensed credit institutes, and wrote that given the CBI’s frequent warnings in declaring such institutes as illegal, the depositors’ demand for their money be paid off by the CBI is not reasonable.
Int’l conference on Iranian Capital Market, Higher Diversity-Higher Return to be held in Kish Free Zone
The Iranian Securities & Exchange Organization (SEO) will hold a one-day international seminar on the Iranian Capital Market, Higher Diversity-Higher Return on October 31st in the Kish Island. The conference will be held concurrent with the 4th Int’l Exhibition of Bourse, Bank, Insurance and Investment in this free zone. 45 senior economic, financial, political and investment officials from 16 countries including Germany, Switzerland, Turkey, India, Korea, Lebanon, UK, Greece, France, Kazakhstan, Pakistan, Belgium, Luxemburg, South Africa, and Indonesia will attend this event. Tasnim news has quoted Yasser Fallah, the public relations director of the SEO as saying that ambassadors of the Republic of Korea, Turkey, and the economic consular of the Embassy of France will attend this event.
Among other participants in this event are a number of international financial institutions and asset management firms such as Ernst &
Young, BlackRock, KPMG, Uhlmann Investment Management, a senior 10-head senior Korean financial delegation, and senior delegations from Turkey, India, Greece and Germany.
