Economy, Business And Markets

IDRO Excels at Cutting Deals in Post-Sanctions Era

The Iranian industrial conglomerate will direct particular attention toward oil and gas industry this year
IDRO’s Managing Director Mansour Moazzemi
IDRO’s Managing Director Mansour Moazzemi
IDRO has invested about 100 trillion rials ($2.56 billion) in 19 projects, which will create more than 10,600 direct jobs this year

Seven out of 24 memoranda of understanding between the Industrial Development and Renovation Organization of Iran and its foreign partners in the post-sanctions era have been signed into contracts.

This was announced by IDRO’s Managing Director Mansour Moazzemi in an interview with Financial Tribune’s sister publication, the Persian economic daily Donya-e-Eqtesad.

Established in 1967, IDRO has evolved into one of the largest conglomerates of Asia. The organization’s objective is to develop Iran’s industrial sector and accelerate the industrialization process of the country and to export Iranian products. It owns more than 100 subsidiaries and affiliated companies both domestically as well as internationally.

“These contracts include joint ventures with Russia’s CJSC Transmashholding to manufacture wagons in Iran, French train maker Alstom, Belgium’s Punch Powertrain (manufacturer of automatic gearboxes), French automaker Renault, Italy’s power equipment maker Ansaldo Energia, South Korea’s Daewoo Shipbuilding and Marine Engineering Company and a contract with France’s Maguin to construct a bioethanol plant in Kermanshah,” he explained.  

The deal with Transmashholding is a €2.5 billion contract for joint production of rolling stock in Iran, based on which a joint venture will be formed between IDRO and the Russian company, with the Russian side holding an 80% stake and the rest by the Iranian side.

Alstom signed an agreement with IDRO and Iranian Rail Industries Development Company late July to manufacture 1,000 subway wagons in IRICO. The amount to be invested by Alstom has not been publicized, but an IDRO source, who declined to be identified, told Financial Tribune that about €1.3 billion will be invested in the JV whose main shareholder is Alstom with 60%, while the Iranian companies each will own a 20% stake.

French carmaker Renault signed a trilateral production deal with IDRO and a local private company Negin Khodro (aka Naseh Parto) in Tehran early August. Renault holds the majority 60% share of the new joint venture, while Negin Khodro and IDRO each take 20%.

Moazzemi said €660 million will be invested in the joint production and 150,000 people will be employed.

Daewoo Shipbuilding & Marine Engineering announced an agreement with IDRO for the transfer of shipbuilding technology late December 2016. DSME is the fourth largest shipbuilder in the world and one of the “Big Three” shipbuilders of South Korea (including Hyundai and Samsung).

Under the arrangement, the Iranian government said it would ask the “Korean government and DSME to support … various sectors, including financing and providing of material package.” The deal marks a resumption of the 30-year relationship between the yard and its Iranian clients.

“There are other agreements, particularly in oil, gas and energy sector, manufacturing of helicopters for non-military use and electric cars that are in final stages to become contracts in the near future,” he said.

On IDRO’s job creation plans in the current Iranian year (March 2017-18), Moazzemi noted that about 100 trillion rials ($2.56 billion) have been invested in 19 projects that will create more than 10,600 direct jobs.

“The organization will direct particular attention toward oil and gas industry this year. Expediting the implementation of Phase 14 of South Pars, establishment of companies and signing consultancy deal for E&P project and implementing gas-to-olefins projects through partnership with private sector and foreign company are among the priorities of IDRO this year,” he said.

IDRO’s objectives for the next four years, according to Moazzemi, include lending support to knowledge-based economy, increasing productivity and production, creating value added by improving education and development, boosting domestic production and competitiveness, developing special economic zones, attracting investment and generating employment.

On Tuesday, IDRO signed a memorandum of understanding with the Russian Trade and Economic Development Council for expanding cooperation in the fields of energy, rail and aviation industries.

“Iran and Russia have long-term strategic ties and we’re here to pave the way for greater mutual cooperation,” Moazzemi said in the MoU signing ceremony.

The Russian Trade and Economic Development Council is a state-run entity responsible for trade promotion with a view to strengthening foreign relations of Russian businesses in international markets and facilitating the localization of foreign companies in the Russian Federation.

The council aims to build an efficient system for Russia’s foreign trade development and international economic relations.

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