400 State-Owned Firms to Be Priced for Sale
"Of the figure 60 belong to the energy ministry," Ahmad Mir-Motahari said.
Speaking at a seminar on Energy Ministry privatization policy, he said increasing economic efficiency, promoting competition, and raising revenues are all aims of the privatization drive in Iran.
The government, due to insufficient financial resources and capabilities cannot meet all the society's needs, hence propping-up the private sector is an added solution. The performance of raising revenue by the state-owned companies is such that "pressure is exerted on government in various ways including through higher budget deficits."
Privatization does not entail "liberalization," and the government will still assume a role of supervision after ceding the entities to the private sector, the IPO director added.
If privatization leads to reduce services, production, and lower invested capital in the firms, privatization has not achieved its objectives, Mir-Motahari stated.
"Hence prudent policies should be devised to prevent such outcomes from occurring," he added. "Privatization of banks and insurance companies is pivotal in boosting economic growth."
Iran privatization drive is modeled after Germany's experience following unification saying that reorganization of state-owned companies and setting up holding companies in the Third Five-Year development Plan (March 2000-2005) are a important task of the privatization policy.
"Over 2500 state-owned companies have been evaluated so far, Mir-Motahari underlined.
Minister of Economy and Finance Tahmasb Mazaheri said last month that privatization of economy in the fourth five-year development plan (March 2005-2010) remains the pillar of economic development.
He said for many years, state has dominated the economy in Iran, 'but the outcomes of such policies have been largely futile in economic growth'.
The state-ownership of industry, banks, and insurance companies and other government-affiliated organs were necessary in the past years, 'but now there is no reason for state domination of the economy'.
He referred to the peaks and troughs in the privatization drive in the country, adding privatization as a strategy could not have been thoroughly implemented in the past decade. "Now all organs including the Majlis sees privatization as the cure of the economy's ills." "Privatization has its own returns in different countries based their economic structures."
He also said that a Privatization Support Fund has been set up. The fund aims to promote workers employment and training and directives to that effect will soon be provided to the cabinet.