The National Development Fund of Iran (NDFI) has a new strategy that shows its investment in projects over and above $100 million will be in the form of partnership, a fund official said.
"The fund's priority now is to invest in refineries that produce high-value goods and can complete the petrochemical chain, build infrastructure such as docks and ships and are industry water and electricity suppliers," Alireza Mir Mohammad Sadeghi, the banking and credit deputy of NDFI said.
NDFI will continue financing projects worth below $100m, the official noted. "The fund's investments should contribute to the development of infrastructure complete the petrochemical chain and produce high-value goods."
He noted the NDFI invested nearly $35.7 billion in industries since 2012. Almost 63% of this amount or $22.7 billion was allocated only for the oil and gas industry. Close to $11 billion went into the upstream oil sector, $9 billion in the gas industry, and $2.7 billion in petrochemical units.
The $2.7 billion investment in the petrochemicals was for ten projects, with “Ilam Petrochemical Plant being the only one with full physical progress”. Other projects are either under construction and some are facing challenges with barely 2$ physical progress a month.
The official pointed to the role of applicants’ financial and technical eligibility to get funding, saying that they must have verifiable technical knowledge and be able to operate when there is a crisis.
The NDFI has put in place a monitoring system for projects at the provincial level capable of supervising banking operations.
NDFI, Iran's sovereign wealth fund, was founded in 2010 to save a portion of the oil and gas revenue for future generations and promote sustainable growth. Its mandate is to invest in productive projects that generate wealth and create employment.
Iran's oil and gas revenue have been undermined by sanctions imposed by the United States, hurt the government's budget and restrained NDFI resources. To compensate for the loss governments have focused on boosting non-oil export and attract foreign investment.
The petrochemical industry has been a significant contributor to the non-oil export agenda with the government prioritizing its development and expansion. The industry's output is projected to reach 120 million tons by 2025.
Despite the challenges, namely the economic sanctions, the petrochemical industry has made significant progress in recent years with the country emerging as a leading producer of petrochemicals in the region.
Bank Sina
The NDFI recently said that it has acquired a 33% stake in Bank Sina following approval from the Central Bank of Iran. This move is in line with NDFI's declared policy that it wants to buy shares in a commercial bank.
Mehdi Ghazanfari, the NDFI chief, said it aims to use the resources of Bank Sina to strengthen its financial clout and play a more effective role in the local financial markets. He emphasized that to be able to have a strong impact on economic development, NDFI should first complete its own development work and minimize losses in financial and banking transactions.
The acquisition of a 33% stake in Bank Sina will help NDFI to start issuing rial and foreign exchange guarantees, facilitating buyer and seller credit, and provide rial loans.
The acquisition of 8.37 billion shares in Bank Sina is valued at about 45 trillion rials ($107 million), based on the lender’s market value.
This move by NDFI is expected to strengthen Bank Sina, which has been facing financial difficulties in recent years due to mounting bad debt. The bank has been working to improve its financial performance, and this acquisition by NDFI is seen as a positive move for the bank's future.
Bank Sina was established in 1985 and is one of the oldest private banks in Iran. It offers a wide range of banking services, including loans, and credit cards with a network of branches across the country.
