Economy, Business And Markets
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Privatization Gathers Pace

Privatization Gathers PacePrivatization Gathers Pace

The privatization process accelerated after President Hassan Rouhani took office, Securities and Exchange News Agency (SENA) reported on Tuesday. Nearly 392 trillion rials of government property were privatized during the three years since August 2013. That makes up 38% of all the assets sold to the public since privatization began 15 years ago, said Ali Ashraf Abdullah Pouri Hosseini, head of the Iranian Privatization Organization.

IPO, however, is struggling to find buyers. The organization put 230 government companies up for sale hoping to raise 138 trillion rials from them during the last fiscal year which ended March 20, 2016. However, poor market conditions and unprofitability of most of the firms meant few of them were sold. Only 48 of the companies were sold, generating barely 37 trillion rials of the planned 138 trillion for the government.

Part of the hardship in finding buyers is the IPO commitment to selling companies only to the public, a mandate issued by Economy Minister Ali Tayyebnia. According to Hosseini, 81% of last year's privatized stocks were sold to the public. During former president Mahmoud Ahmadinejad presidency and when the so-called 'privatization' process began, most of the assets were bought by quasi-state agencies, giving them a huge role in and influence over the economy.

Also as management of these companies remained unchanged and government oversight weakened, their performance left much to be desired. Many prominent economists, including senior presidential advisor Masoud Nili, have been quoted s saying that the privatizations during the 2000s left Iran worse off than before.

 

Financialtribune.com