Oil Ministry Had Opposed Kala Naft Privatization

Oil Ministry  Had Opposed  Kala Naft Privatization Oil Ministry  Had Opposed  Kala Naft Privatization

The oil ministry was opposed to privatization of oil companies and therefore, Tehran Manufacturing Support & Procurement Company (Kala Naft) was dissolved upon the oil ministry's suggestion and the Iranian Privatization Organization (IPO)'s decree, Mehr news agency quoted oil minister Bijan Namdar Zanganeh as saying.

Kala Naft was initially supposed to be privatized, as per Article 44 of the constitution, but the government's economic commission agreed to dissolve the company "as privatization was not feasible," Zanganeh said.

The oil ministry disapproved of the company's privatization plan and proposed to the economic commission to first merge the company with the National Iranian Oil Company (NIOC) to be able to close it down afterwards. Therefore, instead of being transferred to private entities, Kala Naft is considered as a management body of the NIOC and remained under the government's authority.

Privatization of the company was decided by the ministry of economic affairs and finance and the IPO at the outset, but after 14 months of negotiations, the oil ministry could talk the authorities into dissolving the company.

Besides Kala Naft, several other companies active in the oil, gas and petrochemical industries were in the list of privatization. These include Pira Drilling Co., Iranian National Drilling Co., National Iranian Gas Distribution Co., Fuel Conservation Company along with eight gas refineries. However, the process of privatizing seems to have ground to a halt in these companies and now they are to be considered a part of NIOC.

Kala Naft Support, Construction and Procurement Management Co. (KSCPM) was established upon dissolution of Tehran Kala Naft to shoulder the responsibility of supporting domestic production in oil industry.

Privatization is promoted by Iran's constitution to accelerate growth of national economy , enhance the efficiency of economic enterprises and productivity of human and material resources and technology, and also reduce financial and administrative burden on the government which are encumbered as a result of its controlling role in economic activities.

However, the oil ministry's recent plan of action for privatization of its affiliates apparently disregards the objectives of previous privatization schemes.