The new head of the Iranian Privatization Organization (IPO) said the government needs true grit to put in place effective privatization policies that can deliver.
In a meeting with private sector representatives on Saturday, Hossein Qorbanzadeh said privatizing government assets demands private enterprise and the government work in closer harmony.
“Flexibility among private investors and the government is crucial,” he was quoted as saying by IRNA.
“If we really believe in privatization in the true sense, we must create the proper grounds and offer appropriate ways and means,” Qorbanzadeh said.
Questioning governments’ approach to downsizing and the much-publicized privatization in recent years, he said, “Whatever has been done under the privatization banner so far has not achieved the desired goals”.
The main problem with the government’s privatization initiatives, he said, is that it gives up ownership but still insists on exercising control over what it does not own.
Qorbanzadeh said the IPO under his watch believes in “divesting ownership as reward for efficient management”. This means divestment must be followed by development, creating jobs and efficient management of divested property.
Head of the Iran Chamber of Commerce, Industries, Mines and Agriculture, Gholamhossein Shafe’i, recently called for a sea change in divestment rules to encourage private companies to come forward and get the job done.
He proposed setting up a joint commission comprising representatives from the private sector, cooperatives, judicial, legislative and government officials to overhaul the apparently dysfunctional privatization regulations.
As for another drawback of the existing privatization process, the government has more often than not sold companies and projects in lieu of its ballooning debts, in particular to insurance companies and contractors of major infrastructure projects.
Former economy minister Farhad Dejpasand earlier said transferring government and state-owned companies in exchange for unpaid debts account for an estimated 15% of the total government divestment so far.
Schemes in Limbo
Qorbanzadeh said that the government has been unable in realizing privatization revenue forecast in the 2021-22 budget.
The government expects to generate 960 trillion rials ($3.4 billion) by selling surplus assets by the time the fiscal year is out next March.
However, experts cast doubt on the ambitious projections, saying it is unrealistic. In a report published earlier in the week by the Majlis Research Center, the government at best would be able to realize 30% of the projections or 300 trillion rials.
Based on earlier Economy Ministry estimates, about 1,000 companies and estates owned by the government are on the divestiture list.
These include the Pars Agro-Industry & Animal Husbandry Company, Esfarayen Industrial Complex, Wood, Metal, Plastic and Electronic Industrial Complex (Sima Choob), South Aluminum Corporation (SALCO), Hegmataneh Petrochemical Compnay, Shahid Abbaspoor Dam & Power Plant Operation & Generation Company, Yazd Meat Company and Iranian Catalyst Development Company.
The government sold assets worth 1,240 trillion rials ($4.4b billion) in the last fiscal year, 320 trillion rials of which was via the stock market. This amount was over and above the initially projected (115 trillion rials) in last year’s budget.
Most of the earnings were from the sale of banks and refinery companies via two exchange-traded funds. The government also embarked on retail sale of shares during the heydays of the share market in the first half of last year.
