Parliament Readjusts Oil Share in Budget

Parliament  Readjusts  Oil Share in Budget Parliament  Readjusts  Oil Share in Budget

Members of the parliament on Monday approved an amendment allowing for an increase in government revenues from export of crude oil and gas condensate up to 150 trillion rials ($5.44 billion at official exchange rate), ISNA reported. The move is interpreted by analysts as part of the legislature's efforts to make estimates of oil revenues for next year more reasonable.   

This is in addition to the already forecast oil revenues of around 530 trillion rials ($19.2 billion) for the next year.

Natural gas use tax should bring about a total of 21 trillion rials ($761 million) in revenues for the government in the next Iranian year (begins March 21), as part of the approvals by lawmakers discussing next year's budget.

On their second day of discussing the budget bill, the parliamentarians held a debate on part of the budget concerned with reform of financial regulations, which also includes the removal of obstacles to industrial competitiveness.

While the current year’s budget was dependent on oil revenues by 39.3 percent, next year's budget relies on oil revenues by 36.3 percent.

According to the parliament's approval on Monday, the surplus oil revenues – up to the specified amount – will be deposited into the Oil Stabilization Fund after deducting the shares of the oil ministry, the National Development Fund of Iran and the 2% share of the oil producing provinces.

Surplus oil revenues from previous years are usually saved in the NDFI.

Meanwhile, discussing the budget bill's section of government revenues, the MPs decided that the price of every liter of oil products will increase 5% next year.

Also during Monday's session, the NDFI's share of next year's oil revenues was set at 20%. The CBI is urged to deposit 20% of the total value of natural gas exports in the NDFI after deducting the value of imported natural gas. The NDFI will receive its shares of oil and natural gas exports as of February 2016.

>>>Oil Investments Dwindling  

Speaking at the parliament, Oil Minister Bijan Namdar Zanganeh said the domestic oil industry needs to be financed properly in order to develop despite the difficulties caused by sanctions.

"When the oil price was at $100 and we sold two million barrels of oil, the oil ministry’s share was $13 billion. But for the next fiscal year, the parliament has predicted the oil price to hover around $40 a barrel and exports are a bit higher than 1 million barrels, while the ministry's share from exports will be less than $3 billion," Zanganeh told the lawmakers.

"So, how can we run the oil industry with this meager amount?” he complained.

Zangeneh said the oil ministry’s share of oil sales should increase from 14.5% to 30% so that it could accelerate development of joint oil and gas fields.

The minister said that $21 billion was invested in the oil sector in the calendar year ending March 2012 and $17 billion in the following year.

"With this trend, investment from the ministry's internal resources will be next to zero,” Zanganeh said.

He warned that any blow to the oil sector would leave "a destructive impact on the NDFI", which is the government's last resort when it comes to using the oil savings for investment in industrial projects.