Iran Economy Update Issue 18/2017

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Iran Economy Update

Issue 18/2017 THURSDAY FEBRUARY 9^TH

Iran to sign €2 billion worth deals in energy sector by March 20

ISNA published a short report on February 8^th on the status of Iran’s renewable energy contracts and negotiations with foreign companies in this area. The news agency has quoted Energy Minister Hamid Chitchian as saying that in the post-sanctions era, Iran has received

$10-15 billion euro worth investment proposals from foreign companies most of which have been in the field of renewable energy. “The only problem Iran has been facing in developing renewable energy was lack of sufficient guaranteed payment for capital but in the past years, the Energy ministry has adopted measures for assurance,” wrote ISNA. The ministry has assured purchasing the generated electricity but since financial costs are high, domestic companies have been encouraged to use foreign resources, added ISNA.

On 29 January, Hamid Chitchian announced that some 2 billion euro worth of contracts for establishing power plants and implementing water projects will be signed with foreign companies by the end of this Iranian year (ending 20 March). Chitchian explained that most of the 2 billion euro worth contracts will be in the renewable energy. In total, negotiations are going on for signing 10-15 billion euro contracts with foreign companies for the water and electricity projects, said the minister. According to Mehr news agency, Chitchian said that so far negotiations have been held with companies from Russia, China, Korea, Japan, Turkey, Belgium, Denmark, Spain and Britain for implementing Iranian water and electricity projects. “So far, some contracts have been signed for establishing renewable and solar power plants,” said the minister.

On 28 January, the deputy Energy minister for planning and economic affairs had said that the value of the contracts the country has signed post-sanctions amounts to 10 billion euros.

According to Eghtesad¹ News website, Alireza Daemi said that the contracts have been signed with companies from Germany, Russia, China, Japan and South Korea. In all such contract, explained Daemi, two conditions have been set, i.e. utilizing more than 50 percent of the domestic capacities as well as technology transfer.

Iran’s petrochemical industry needs $55 billion in investment

The managing director of National Petrochemical Company said that this industry requires some

$55 billion in foreign investment that should be spent on 50 plans, according to ISNA. Ms.

Marzieh Shah-Daie who is also the deputy Petroleum minister explained that out of these 50 plans, 30 ones should be implemented under the 6^th Development plan that will start being implemented as of March 21, that are estimated requiring $39.8 billion in investment. She said that the country’s petrochemical production capacity has increased from about 20 million tonnes annually in 2005 to about 64 million tonnes annually in 2016.

Explaining about the impact of the nuclear deal on Iran’s petrochemical industry, Ms. Shah-Daie said that several negotiations have been held in the past year with renowned international companies in this industry and that the country has managed to take back its market share in Europe and South Africa. Also, she said, our status in petrochemical transportation and insurance has been improved and the international banks are guaranteeing investment in Iran,

1 Eghtesad in Farsi means “the economy”

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added the NPC managing director. Moreover, the cost price of our production has dropped because of the possibility of having direct negotiations with foreign companies. She named some foreign companies that have declared desire to invest in Iran’s petrochemical industry including Total, BAFF, Linde, Mitsui, Shell, and Hyosung. She also said negotiations are being held with a number of first-tier international banks for funding and investment. She however admitted the slow speed of talks with the international banks that according to her are still worried about investment guarantees and falling afoul of US penalties.

TPO released report on number of foreign delegations visiting Iran post-sanctions

Te Iranian Trade Promotion Organization has published a summary report about the number of foreign delegations that visited Iran during the first nine months of the current Iranian year (from 20 March to 20 Dec 2016) and compared the figures with the similar period of the last year. As the table shows, the highest number of foreign delegations that visited Iran during this time belongs to the US, Europe and CIS category.

Arab and African countries

20 March – 20 Dec 2015

20 March-20 Dec 2016 number of held joint commissions/seminars 4 3

number of signed docs in joint commissions 22 8

number of countries sending delegation 1 7

number of delegation members 30 380

number of top senior officials visiting Iran 0 5 number of foreign ministers visiting Iran 1 7

number of signed contracts 2 20

Europe, America and CIS

20 March – 20 Dec 2015

20 March-20 Dec 2016 number of held joint commissions/ seminars 3 5

number of signed contracts 5 62

Asia-Pacific

20 March – 20 Dec 2015

20 March-20 Dec 2016 number of held joint commissions/ seminars 3 9

number of signed contracts - 37

Source: The Iranian Trade Promotion Organization (TPO)

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The Feb 4 issue of the daily Donyay-e Eghtesad that has re-published the TPO report wrote that in the post-sanctions era, the country’s decision makers have taken 15 basic steps in foreign trade which has ended up with the following positive results:

 Changing the international community’s vision towards the Islamic Republic

 Eliminating Iranophobia and introducing the country as a peace-seeking nation

 Lifting the dreadful shadow of war

 Reinforcing hope and motivation in the society and among the businesspeople

 Releasing a portion of the country’s frozen assets

 Buying aircrafts and renovating the coutnry’s air fleet

 Increasing the amount of oil and non-oil exports

 Realization of a positive trade balance

 Developing and deepening relations with the international community

 Exchanging several business delegations

 Increasing the number of participants in the international exhibitions in Iran

 Establishing relative stability in the business environment and preventing damaging shocks

 Eliminating barriers in export destinations

 Achieving significant decline in transaction costs through reducing banking limitations

 Achieving direct access to the exporters and eliminating middlemen