Iran to issue sukuk for oil industry

March 6, 2011 - 0:0

TEHRAN – The Iranian deputy oil minister said that the ministry plans to issue Islamic sukuk bonds made available for the first time for the littoral Persian Gulf states and Middle East countries.

The Mehr News Agency quoted Mohsen Khojasteh-Mehr as saying that the oil ministry plans to diversify its financial resources and one means of doing this during the Fifth Socio-Economic Development Plan (2010-2015) is to publish bonds.
Oil Minister Masoud Mirkazemi previously told MNA that Iran needs to invest $210 billion for its oil and gas projects during the fifth development plan for building and upgrading refineries and oil and gas networks.
Sukuk is an Islamic financial certificate, similar to a bond in Western finance, which complies with Sharia, Islamic religious law. 
Because the traditional Western interest paying bond structure is not permissible, the issuer of a sukuk sells an investor group the certificate, who then rents it back to the issuer for a predetermined rental fee. The issuer also makes a contractual promise to buy back the bonds at a future date at par value