The government will divest its stakes worth 2,100 trillion rials ($7 billion) in several companies to repay its debt to public organizations by March 2023 when the calendar year ends, head of the Iranian Privatization Organization (IPO) said.
According to Hossein Qorbanzadeh, the Social Security Organization (SC) is the main creditor and the government intends to pay900 trillion rials ($3 billion) to the insurer, Fars News Agency reported.
SSO is the biggest insurance company in Iran that offers insurance services to non-state workers, retirees and the self-employed.
Government arrears to the SSO have leaped over the years due to its inability to pay its share of insurance premium plus other financial obligations under the law.
A non-government organization, the SSO is largely funded by insurance premium contributions (7% by workers, 20-23% by the employer and 3% by the government).
Governments in the past never paid their full share as a result of which the debt has ballooned to several billion dollars and undermined the SSO’s ability of meet its own financial commitments – mainly paying pension to the rapidly rising retiring population. An estimated 50 million Iranians are under SSO cover.
Earlier Mirhashem Mousavi, the SSO chief, estimated the total government debt to the organization to be in the region of 3,000 trillion rials ($10b).
Amid strained budgets, swapping stocks in lieu of debts has been one of the methods available to governments over the years to reimburse their huge debts to state and public companies as well as private sector contractors.
Apart from settling debts with the SSO, Qorbanzadeh said the government would divest an additional 1,300 trillion rials ($4.3b) shares against its arrears to several other public entities, namely the Martyr Foundation and Office of Veterans Affairs.
Plans to Divest Shares in Auto Companies
The IPO head pointed to plans to divest the government’s remaining stake in the two main domestic car companies, Iran Khodro (IKCO) and SAIPA.
“The government holds a 5% and 17% stake in Iran Khodro and SAIPA, respectively” he said, and floated the idea of offering shares in blocs in the near future.
Qorbanzadeh earlier said that the government shares in the two car companies are held as collateral with banks and described it as the main obstacle ahead of their divestment.
As stipulated in the budget law, the government expects to generate 710 trillion rials ($2.3b) in its remaining stake in various listed companies by the yearend in March 2023.
The figure is 25% or 240 trillion rials ($800m) lower than the projected income in the last year apparently because of the fact that the poor performance of the government in realizing the projected revenues last discouraged budget planners from setting higher revenue targets.
The government for long has sought to fully privatize some big companies and cede the remaining stake. National Iranian Copper Industry Company and Mobarakeh Steel Company are other big names in which the government holds stake.
Among companies in the divestment list are Pars Agro-Industry & Animal Husbandry Company, Esfarayen Industrial Complex, Wood, Metal, Plastic and Electronic Industrial Complex (Sima Choob), South Aluminum Corporation (SALCO), Hegmataneh Petrochemical Compnay, Shahid Abbaspoor Dam & Power Plant Operation & Generation Company, Yazd Meat Company and Iranian Catalyst Development Company.
