Achieving 80 Percent of Planned Privatization

One of the most important recent discussions with regard to transferring companies was pricing their stocks.

The privatization figure for (the Iranian calendar year) 1382 is inflationary (unreal) and is by no means achievable. The 80-percent realization of privatization has become possible with much difficulty. Therefore, more attention must be paid to budgetary figure during upcoming years.

The sudden acceleration of privatization brought about the happiest day for the Iranian economy. Seyed Ahmad Mir-Motahari, head of Iran Privatization Organization, who came under serious fire for offering 860 billion rials worth of stocks during the first half of the current Iranian calendar year (started 21 March 2003), told reporters that 9,400 billion rials of stocks has been presented on the stock exchange by the end of fall, thus brushing aside many charges. A couple of days earlier, Mehdi Karbasian had broken the same news with much fervor. It seemed that each of the government’s top economic officials had decided to take the credit for the declaration. The 80% realization of the privatization objectives for the current year, although faced by a 20% budget deficit, is promising. The privatization drive in the country, which practically started from the middle of the Third Economic Development Plan, was progressing at a snail’s pace. The sudden acceleration of the trend, in addition to indicating closer cooperation with Iran Privatization Organization on the part of most state-run companies, is further evidence of the convergence among economic officials or the beginning of improvement in the country’s economic management. On the other hand, since the main axes of the Fourth Economic Development Plan include privatization and competitiveness, one can be hopeful that the first step would be taken in the same direction, although there is a long way from providing the grounds to finishing the job.

Head of the privatization organization emphasized that privatization was characterized by defining new opportunities for the participation of the private sector in economic activities and downsizing the government. Therefore, the government must not transfer ownership of its assets to the private sector in order to earn new revenues.

Mir-Motahari, who practiced austere policies for presentation of shares on the strength of false stock prices and to encourage committed transfer of stocks during the first half of the current year, announced the establishment of a transfer basket that included more than 9,000 billion rials worth of governmental shares. He added, "The current plan includes transfer of half a million governmental stocks. The shares include priced stocks of three companies of Sadra, Sanayeh Azarab, and Machine Sazi Arak worth 4,400 billion rials, the priced shares of two cement production companies worth 2,000 billion rials and 1,200 billion rials; shares of petrochemical companies whose letter of attorney has been given to the organization by the National Petrochemical Company (NPC). All the shares are managerial and controlling shares and there is a high willingness in the market to buy them. Also, the letter of attorney for presenting shares of Karoun Cement, Avangan, Nirou Klor and Abfar companies has been offered by the Ministry of Energy."

While announcing the presentation of 1.5 million shares belonging to 10 other companies, the official stated that the shares were worth 1,000 billion rials, whose related advertisements have been frequently published in the press.

"We are planning to price the shares of 160 more companies. In addition, presenting small stocks is also underway," he noted.

The official noted that the value of the stock exchange, return of investment as well as many other factors is taken into consideration when determining prices. He also announced design of a ‘Privatization Model’ that would cover all the national demands; and that Iran Privatization Organization was drafting the bill of privatization law, which would be soon presented to the government.

"In this model, we have tried to pave the way for more participation of the private sector in the national economy by improving the government’s structure (through downsizing the government). Boosting production level, exports as well as productivity of companies are the main axes of this model. After that, we will try to make the most practical decisions that would lead to protecting employment at transferred units," he noted.

The budget deficit which has been nagging national economy year in and year out, like many other concepts, has changed name and is mainly referred to as ‘non-realization of government’s revenues’. Also the problem with privatization would not solely be solved through offering stocks, but the next step should be paying attention to time and assessing the market demand.

With regard to the slow trend of presenting stocks since the beginning of the year and the reason for not offering stocks at a certain juncture during which many people called for more speedy presentation of stocks, Mir-Motahari said, "If we had presented stocks at that juncture, the price would have continued to soar and now the government would have been held responsible for presenting low-output stocks at a high price."