Government spokesman Ali Rabiei Saturday announced a timeframe to divest government shares in state-owned companies in three phases. The first commenced today.
The government has issued a call for subscription of its residue shares in three banks and two insurance companies to be offered via an exchange-traded fund.
It has a 17% stake in Tejarat Bank, 17% in Bank Mellat and 18.32% in Bank Saderat Iran. It also owns 17.34% shares in Alborz Insurance Company and 11.44% in Amin Reinsurance Company.
In the next stage stakes in four refineries will be up for grabs on June 21. Shares on offer include 20% stake in Tehran Oil Refining Company, Isfahan Oil Refinery, Tabriz Oil Refinery Company and Bandar Abbas Oil Refining Company, IRNA reported.
Rabiei said the government will launch the third phase in the beginning of the second half of the current fiscal year (Sept 22) by selling shares in giant auto and metal companies in a separate ETF.
The fund is expected to hold 12.05% of the government stake in the National Iranian Copper Industry Company, 17.2% in Mobarakeh Steel Company, 14.04% in Iran Khodro (IKCO) and 23% in SAIPA.
Prices will be based on average final price of shares displayed on the stock market bulletin boards during the calendar month to the day prior to the subscription date. Prices will be subject to 20% discount and all Iranians can buy ETF units with their national ID cards.
More Divestures
The official said the government is determined to speed up divestitures, reiterating that it “has a comprehensive plan in this regard”.
On the detrimental impact of the coronavirus on the economy, Rabiei said by divesting its assets the government seeks to secure funds for new investment, create jobs and wrap up unfinished projects delayed largely due to financial constraints.
“There are some [development] projects that have made 90% progress. Lack of funds and the sanctions” have put the projects hold, he concurred.
Besides the companies on the current divestiture list, the spokesman outlined other companies the government plans to cede. Among the most important being Esteghlal and Perspolis –the two top football clubs in Tehran.
The National Iranian Oil Refining and Distribution Company and the Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) are other candidates.
While the government focuses on the divestitures with fanfare, observers and economic experts of various stripes warn about the consequences of the move, particularly on the stock market.
News about the divestures has pushed up indicators in the stock market in the past week as investors hunt for shares of companies in which the government has stakes.
Observers have also criticized the government’s method of divestiture, saying that at best it is a method of financing, not divesting to the private sector as it still allows the government to exercise control over the divested companies.
Dismissing such claims, Rabiei described the divestiture plan as the “government’s key strategy to help lift the economy”.
“The divestitures will lead to new investment in the economy and are instrumental to boosting production and crating jobs’’ for the army of unemployed.
Government divestitures are in line with Article 44 of the Islamic Republic Constitution that offers much-needed space for private enterprise, promotes downsizing and curbs the bloated bureaucracy.
According to privatization laws, state-owned firms fall into three main groups.
The government is barred from ownership, investment and managerial posts in Group One. It is obliged to transfer 80% of all firms in Group Two to private, cooperative, public and non-governmental organizations.
Ownership, investment and senior managerial positions in Group Three are the exclusive premise of the government.
