Petrochemical complexes will have to pay an extra $3 billion for their debt to the oil ministry if a change in the official exchange rate is brought forward by three months, according to Jafar Ghaderi, member of the Majlis planning and budget committee, Fars news agency reported.
Earlier this year, the exchange rate for the US dollar was increased from 12,260 rials to 24,500 rials. The date for the rate rise was later postponed from September to late December. This has turned into a bone of contention between the oil ministry and petrochemical companies, as the three month delay will cost the oil ministry $3 billion.
Ghaderi had estimated the oil ministry's dues from petrochemical companies at $3.7 billion, adding that the ministry intends to open a letter of credit (LC) to sell feedstock to petrochemical companies, based on which, they would open an LC, and the ministry would receive the sum from the bank.
With regards to the multibillion dollar debt, petrochemical companies claim part of the debt is accumulated from the past, and the rest is from current supply of feedstock. They insist their present debt is insignificant and they often pay for their feedstock within a few months.
According to reports, oil officials now say opening of an LC is unnecessary, because petrochemical companies are repaying.
However, the high level of debt is also the result of fluctuations in foreign exchange rates.
Additionally, refineries have difficulty clearing their debts to the oil ministry, as some of their customers, including power plants and airlines continuously fail to meet their financial commitments on time.
Iranian airlines have an overall $300 million debt to petrochemical firms, up from $225 in March. Oil officials claim they lack an effective tool to collect dues from airlines, while halting the supply of fuel is also not on the cards.
