After publishing the names of 20 state-owned companies for divestment, the Iranian Privatization Organization concurred that these companies face countless challenges in the divestment process.
The IPO has listed 189 government-controlled companies, including 23 listed in the stock market and 168 non-listed, Tasnim News Agency reported, citing IPO data.
Divesting most non-listed firms is irrelevant simply because of their weak finances and legal/judicial barriers, the IPO said.
Of these firms, 57 are in the services sector and in effect cannot be sold to private owners. Many more are dropped from the list because of almost similar hurdles.
According to the IPO, barely 20 companies can be assessed and priced and they too are not immune from challenges. Enumerating some of the problems, the organization referred to the weak stock market and the pattern of shrinking share prices in the past two years as a major distraction that has rendered divestment a gargantuan task, if at all.
In addition, some non-listed companies may undergo lengthy valuation processes that may take four months, to the say the least. IPO says if non-listed companies are to be assessed based on their net asset value (NAV) there may be few, if any, buyers around.
In addition, in many cases the government’s share in some big companies have been put up as collateral with banks for loans.
This is all the more conspicuous with the two automotive companies, Iran Khodro and SAIPA along with the Mobarakeh Steel Company and the National Iranian Copper Industries Company.
Apart from these challenges, the IPO said in some cases obstacles are created by administrative bodies (senior executives) as they refuse to prepare the groundwork for divestment.
Citing one example, the IPO said the Organization of Free Trade-Industrial Zones is strongly opposed to divesting Kish Airlines, which is fully owned by the government.
Earlier in the week, the IPO added 20 state and government owned companies to the list that the government plans to fully divest.
The new candidates are refiners in Kermanshah, Khuzestan and Arak plus the giant Persian Gulf Star Oil Company, in which the government has a 17.9% stake.
The list includes Esfarayen Industrial Complex, Esfarayen Lule Gostar Company, a steel tube firm, Jajarm Aluminum, South Aluminum Company, Azarbaijan Steel company, two steel companies in Baft and Meibod in Yazd Province, Kish Airlines, two mass construction companies affiliated to the Urban Regeneration Corporation, Sefidroud Agro and Livestock Company, Sugarcane & By-Products Development Company.
The two main football clubs, Esteghlal and Persepolis, are also candidates. The clubs recently went public but the government still holds the majority shares.
According to the 2022-23 budget, the government expects to generate 710 trillion rials ($2.4 billion) from divestment this year.
Observers say this is a tall order, citing disappointing results of the government divestment agenda in the recent past.
