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Strategic Alliance
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Iran’s petrochemical industry
has been the manifestation of a nation’s will to build advanced
industries and bring in the latest know-how. |
As the conference director and IPCC
chairman, Dr. Mansoor Moazami was perhaps the busiest man at the IPF. The
crucial role of the Iranian Petrochemical Commercial Company is undeniable in
giving the petrochemical industry the business edge it demands. Moazami’s
speech on the objectives, policies and performance of NPC’s commercial sector
was an area of focus for all participants. His statements follow in brief.
The Petrochemical Commercial Company
(PCC) was founded in 1989 to develop the appropriate answers and solutions to
the challenges facing the petrochemical industry. It was hoped that by making
the industry more efficient and effective, the nation’s reliance on income
derived from the sale of crude oil would decrease.
Iran’s petrochemical industry has been
the manifestation of our nation’s will to build advanced industries and to
bring in the latest know-how. Over the past few years, this industry has
successfully played a role in protecting and guiding the related down-stream
industries by providing over 4000 companies with the required raw material.
The critical role of the industry is further shown when the market potential
of Iran with a population of over 65 million and a low per capita consumption
is appreciated. With the increasing needs and rising volume of commercial
activity resulting from the growth and development of the petrochemical
industry, PCC has had to redefine its role and to seriously reinforce its
organization.
PCC is presently composed of 5
management divisions: Foreign Commercial Division, Domestic Commercial
Division, Finance Division, Technical Support Division and Administrative
Division. While running representative offices in England, UAE, Germany,
China, Singapore and India, PCC has also assigned specific tasks to the
following companies:
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Petrochemical Commercial
Transportation Company (PCTC)
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Technical Inspection Company (ITI) to
oversee the products and storage facilities
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SPEC as a company created to furnish
parts and chemical materials needed by the industry, from domestic or
overseas sources.
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The real value of strategic
alliances is not in relieving the budgetary concerns of a company; it is
in having access to a wider range of activities. |
Operations of PCC:
Parallel with the significant 1300% increase
in the production volume of petrochemical products between 1989 and 1998, the
sales activities of the PCC have increased to over 8 million tons. In 1997,
the petrochemical sector exported over 3,057,000 tons of products for a value
of $560 million. In 1998, however, this sector exported $452 million due to
financial crisis in South East Asia and the slump in the real value of crude
oil.
As of 1989 to 1998, export of
petrochemicals rose from 348,000 tons to 3,630,000 tons at an annual growth
rate of 30%. During the same period, the exports’ value increased from $29
million to a high of $560 million in 1997 before dropping to $452 million.
Nevertheless, the annual growth rate has
been 36%.
Iran has a wealth of down-stream
industries which consume a significant volume of petrochemical products.
Domestic consumption here rose from 578,000 tons in 1989 to approximately
2,800,000 tons in 1998 indicating an annual growth rate of 19%. This growth
has taken place despite the fact that NPC does not produce all the
petrochemicals needed in the domestic market.
The value of domestic sales has risen
from 36 billion rials in 1989 to 2780 billion rials or approximately $1
billion in 1998. It is anticipated that the sales value will rise to 3200
billion rials this year, thus making for an annual growth rate of 14% over the
last decade.
Last year, the most important markets of
PCC were Europe 21%, China 19%, Far East 19%, India 16%, South East Asia 13%
and the Middle East 12%. PCC aims to focus its marketing activities in China,
Europe and India.
Goals and Policies:
The principle challenge in the domestic
market is strengthening the information systems in order to enable PCC to
conduct a detailed market research study and identify the needs and potentials
of the market. To better familiarize the consumers with the petrochemical
products, PCC is determined to develop its network of local representative
offices and to gradually enter electronic commerce arena.
Regarding the international markets, PCC
is pursuing certain specific objectives in order to realize the strategic
plans of the NPC by increasing its exports to $7 billion.
PCC’s Macro Policies:
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Identifying the ultimate buyers and
eliminating intermediaries.
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Active presence in markets and close
cooperation with buyers in order to better predict market trends.
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Studying and analyzing the economic,
political, technological and social environment of overseas markets.
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locating new markets and customers
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Instilling the "customer services"
concept and mentality
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Reviewing novel sales methods and
creating the facilities for credit-based sales
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Upgrading the docking facilities of
ports and the shipping services
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Entering into strategic cooperation
agreements with strong and established foreign companies
Objectives Approved in the Third Five-Year Plan
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Increasing the competitiveness of PCC
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Improving PCC’s commercial structure
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Improving storage, packaging and
transportation of products
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Developing electronic commerce
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Joint cooperation with foreign
companies
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Strengthening the export facilities
and opportunities
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Expansion of transportation network
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Expansion of docks
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Eliminating the structural obstacles
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Encouraging the private sector to
export
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Increasing cooperation with the
private sector to expand international trade
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Providing domestic companies with
marketing services
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Technical and information support to
encourage the private sector to invest
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Guaranteed quality control
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Maintaining ISO 9000
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Improving and following through
after-sales-services to customers
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Instilling TQM throughout PCC
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Domestic consumption rose
from 578,000 tons in 1989 to approximately 2,800,000 tons in 1998
indicating an annual growth rate of 19%. |
Strategic Alliance:
The real value of strategic alliances is not
in relieving the budgetary concerns of a company; it is in having access to a
wider range of activities that are beyond the capabilities of the company and
thus enabling it use the knowledge and experience of other companies to
compensate for its weaknesses. Accordingly, PCC solemnly aims to establish
close working relationship with successful companies in order to have a more
fruitful presence in the global markets. Without the need for a complete
merger, a strategic alliance agreement enables companies to pursue their
common strategic interests. A joint venture agreement can initially be in the
areas of direct investment, assistance in marketing and sale of products and
can eventually encompass exchanges of human resources and transfer of
technology.
PCC is blessed with such merits of easy
access to a variety of down-stream industries, large population and high
consumption potentials access to regional markets, abundance of required raw
materials and expert workforce. Given these advantages, the company is willing
to seriously consider offers for strategic alliances in such areas as
marketing, investment, sales and barter of goods.
A short break during the second day of
IPF provided Iran International with a chance to have an interview with Dr.
Moazami. The brief Q&A follows:
How do you evaluate this event so far?
The support and attention toward IPF
have been very impressive and in fact beyond our expectations. I hope that the
current negotiations reach the level of execution as we anticipate. I am
pleased to announce that during this short period we have had very positive
talks with representatives of both international and Iranian companies and
hopefully, these talks will lead to profitable results.
Considering the IPF as an initiative step towards
encouraging foreign investment in the Iranian petrochemical industry, what are
the next measures to be adopted by NPC?
I believe that all my colleagues at NPC
must exert efforts so we can achieve our objectives following such events.
Following through the goals set in IPF, determining corresponding frameworks
for these goals and coordinating the demands of foreign companies with our
objectives will definitely enable us achieve a better performance.
Has IPF led to any contracts yet?
A $50 million agreement is being concluded between
Petrochemical Investment Co. and a Swiss Company for the production of P.E.T
in the Petrochemical Special Economic Zone. Feasibility study of our projects
is now under negotiation with a number of companies namely Shell, Elenac,
Petronas Borealis and BP. Some of these negotiations have been finalized but
contracts are yet to be signed.
Do you believe that all facilities
required to attract foreign investment are presently provided?
When investor considers an investment case, he prioritizes
his demands. Investors most of all need an attractive turnover on their
capital. Secondly, they require a market for the type of product which is
being manufactured. We believe that these facilities have been provided and
the great enthusiasm of attendees is a testimony to this claim. |
