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Iran’s government plans to pay its debts to private firms with proceeds it aims to raise by selling stakes in state-held refining and petrochemical companies, Iranian economic daily Financial Tribune reports, citing a member of the Tehran Chamber of Commerce, Industries, Mines and Agriculture (TCCIM).
Iran’s government is currently reviewing a proposal by TCCIM’s energy commission to sell shares in refineries and petrochemical firms in order to settle the huge debts it has accrued with private companies and contractors, Reza Padidar, head of TCCIM’s Energy Commission said, as carried by Financial Tribune.
Amid Iran’s economic struggles, largely due to the U.S. sanctions on its oil, shipping, and banking industry, many contractors and private businesses in Iran’s energy industry are not getting paid for the work they have done for government entities.
Due to the lack of payments, some of the private firms in Iran operate at around a quarter of their usual capacity and are on the cusp of halting operations, according to Padidar.
Iran has tried to sell in the past its stakes in several state-controlled energy enterprises, including six refineries, but no buyers were interested, as expected.
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Iran’s Economy Minister Farhad Dejpasand has recently said that the government plans to amend the regulations on stake divestments and try to sell stakes in refineries again, according to Financial Tribune.
Meanwhile, Iran’s economy is struggling under U.S. sanctions and “has entered a steep recession,” with output expected to drop by 9.5 percent this year, the International Monetary Fund (IMF) said in a report on Monday.
“Iran’s main export, oil, is severely restricted, and imports have collapsed,” the IMF noted.
Iran’s fiscal breakeven oil price—the one at which the country would be able to balance its budget—is US$194.60 a barrel for 2020, and US$155.60 per barrel for 2019, according to the IMF.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.