Repayment of $1.5 billion loans for petrochemical projects will be settled by 2018, production manager at the National Petrochemical Company (NPC) said Monday.
"Despite financial sanctions against Iran, which prohibits banking transactions, foreign loans for petrochemical projects were repaid over the past years," Ali Mohammad Bassaghzadeh said, adding that $6 billion was repaid during the incumbency of former President Mohammad Khatami (1977-2005).
"Most of the funds were repaid in 2011," he said, without providing figures. Since early 2012, the United States has led a campaign to accelerate the pace of sanctions, focusing on Iran's energy and financial sectors. US efforts to shut Iran out of the international banking system have gained strength as other countries joined the effort.
These efforts have been implemented primarily by the Treasury Department through progressively strong actions, particularly using the authority in legislation in 2011 to cut off Iran’s Central Bank from the international financial system.
Pursuant to the financial sanctions, Iran has turned to Chinese investors to provide funding for several petrochemical projects, which were halted due to lack of funds. In the last Iranian calendar year (ended March 20), China has agreed to provide $7 billion for five petrochemical projects, Bassaghzadeh said, noting that implementation of the projects has gained momentum.
Iran and China reached an agreement in October 2014, based on which the latter will supply 50 percent of equipment for joint petrochemical projects, with the remaining half to be undertaken by Iranian experts. In total, the NPC has put forward 15 projects to the Chinese, with 12 others due to be funded by the National Development Fund of Iran (NDFI). NDFI is the country's sovereign wealth fund, founded in 2011 to transform oil and gas revenues to productive investment for future generation.
In the past two years (March 2013-2014 and March 2014-2015), 40.5 and 44.5 million tons of petrochemicals were produced, respectively. Last year's production increased 10 percent compared with the previous year. Annual petrochemical output is estimated to surpass 66 million tons by March 2016.
Upon completion of 60 incomplete projects petrochemical production capacity will reach 120 million tons per annum. Annual production capacity will rise to 180 million tons via 36 new projects, which need $41 billion in investment.
Following eight days of marathon talks on Tehran's nuclear program in the Swiss city of Lausanne, Iran and the P5+1 (five permanent members of UN Security Council, namely Britain, China, France, Russia, the US plus Germany) reached a framework agreement on April 2 that calls for lifting all trade sanctions against Iran. The details of the agreement are to be finalized by a June 30 deadline. A possible lifting of trade sanctions will be followed by significant growth in the petrochemical sector.
