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Domestic Economy
Wed, May 27, 2009

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Interest in Iranian Gas
Private Sector Questions Presidential Candidates
Astrakhan to Market Iranian Goods
BMI Sanctions
Political
Agrofood 2009 Underway
Agricultural Ties With Paraguay
Large Ship Anchors At Rajaee Port
Iran 39th Industrialized Country
New Petrochemical Plants Due
Armenia to Export Electricity

Interest in Iranian Gas
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Iran and other Caspian Sea states play a key role in meeting Europeƕs gas demands. (Photo by Ali Hassanpour)
German companies are interested in transferring Iran’s natural gas to Europe.
German Ambassador to Turkmenistan Riner Morel made the announcement while addressing the Germany-Turkmenistan Economic Forum held on Monday in Ashkhabad.
Morel said German companies are ready to transfer natural gas from Iran and other Caspian littoral states to Europe, Moj News Agency wrote.
He added that Iran and other Caspian Sea states play a key role in meeting Europe’s gas demands.
Representatives of 30 German companies and 38 high-ranking Turkmen officials attended the one-day economic forum.
Iranian gas is an unavoidable source for the Nabucco pipeline project, which will supply fuel from the Caspian Sea to Europe.
The 3,300-kilometer pipeline aims to bring gas from the Caspian Sea via Turkey and the Balkans to Western Europe by 2013. The 7.9-billion-euro gas line is backed by the European Union to reduce energy dependence on Russia.
Shareholders in Nabucco include OMV of Austria, MOL of Hungary, Transgaz of Romania, Bulgargaz of Bulgaria, BOTA of Turkey and RWE of Germany.
“Development of new gas transport routes, especially with Iran, is the key prerequisite to enlarge European import capacities for new supply sources,“ said OMV Senior Vice President Michael Peisser
Iran is also seeking to build a $4-billion natural gas pipeline to the EU that may rival Nabucco and has given priority to Pars Pipeline.

8 bcm Gas for Pakistan
Iran has also agreed to deliver 8 billion cubic meters of its natural gas to Pakistan annually after the two neighboring states signed a long-awaited deal.
Managing Director of National Iranian Gas Export Company Reza Kassaeizadeh said Tehran and Islamabad also reached agreement on a gas price formula, Fars News Agency wrote.
The initial agreement of the $7 billion Iran-Pakistan-India (IPI) gas pipeline, also known as the Peace Pipeline, was signed in Tehran.
President Mahmoud Ahmadinejad and his Pakistani counterpart Asif Ali Zardari agreed to the 2,100 kilometer-long pipeline that would transfer Iranian gas to Pakistan.
Around 1,100 kilometers of the pipeline would be in Iran, while the remaining would cover Pakistan.
According to the deal, Iran will initially transfer 30 million cubic meters of gas per day to Pakistan, but will eventually increase the gas transfer to 60 million cubic meters per day.
The Iran-Pakistan-India gas pipeline project was conceptualized in 1990. Negotiations over the project were initiated in 1994 between the three countries but there were obstacles to closing the three-way deal due to tensions between India and Pakistan.
India has not participated in the last several rounds of talks, but Iran has encouraged India to rejoin the process.

India Can Rejoin
Tehran says both Iran and Pakistan would welcome India if it decided to join the project.
Nearly 600 kilometers of the pipeline will also run in India, if the country joins the project.
Hojjatollah Ghanimifard, the Oil Ministry’s representative to the IPI talks, said India can still join the deal for the establishment of the proposed Iran-Pakistan-India pipeline, a day after Tehran and Islamabad signed an agreement on the export of Iranian gas to Pakistan.
“Up to now, no Indian official has stated this county’s withdrawal from the project and we hope they make their decision soon,“ he added.
“India has seemingly changed its strategy for meeting its domestic energy needs in the long run,“ Ghanimifard said. “India still has the choice to resume gas talks with Iran and Pakistan.“
“Iran has already completed the main portion of the pipeline form Asalouyeh to Iranshahr (near Iran-Pakistan border) and some 250 kilometers of the project is remained unfinished,“ Kassaeizadeh told Shana.ir.
He expressed the hope that the start of gas delivery would start within three or four years after the contract was signed.
Kassaeizadeh said the giant South Pars gas field would supply gas to Pakistan via.
Iran sits on the world’s second-biggest gas reserves after Russia.
The IPI gas pipeline is a proposed 2,775-kilometer pipeline to deliver natural gas from Iran to Pakistan and India.
The project is expected to greatly benefit India and Pakistan, which do not have sufficient natural gas to meet their rapidly increasing domestic demand for energy.

Private Sector Questions Presidential Candidates
Iran’s Chamber of Commerce, Industries and Mines (ICCIM) issued a statement on Monday containing a list of 25 questions for presidential candidates and urged them to answer.
The ICCIM is the legal representative of the country’s business community and a center for private sector entrepreneurs, Mehr News Agency wrote.
Some of the key questions are as follows:
- What are the challenges and opportunities for Iran in light of the current financial crisis and how should the country counter the repercussions of this crisis?
- With the current difficulty in attracting foreign investment, what solutions do you put forward to increase foreign investment?
- While most countries have sought to maintain the level of production and employment by injecting money into their economic systems, Iran has adopted a contractionary monetary policy. Will your administration follow the same policy?
- What will you do to ensure that the country’s manufacturers can gain access to international markets?
- To achieve the objectives of 2025 Vision, how will you organize relations between your administration and other state bodies such as the parliament and the judiciary?
- In light of the current business situation in the country, what measures will you take to improve trade and business, and remove obstacles to production?
- What plans do you have to facilitate the absorption of workers into the manufacturing sector by imparting technical training?
- Since the current rate of inflation has its roots in the country’s large budget deficit, the excessive use of the national foreign exchange reserve fund, the decision to cover national budget costs through borrowing, and the fact that many manufacturing sector companies are operating at a loss, what is your plan to rein in inflation?
- In light of the current critical situation of the domestic economy and the global economy, and the fact that the country’s industries are in urgent need of financial resources, what are your views on the redirection of state subsidies to support production?
- Will you reform and strengthen the tax system by shifting from production taxation to consumption taxation?

Astrakhan to Market Iranian Goods
Chief minister of Russia’s Astrakhan Port announced its readiness to market Iranian products, including tile, ceramic and bathroom accessories.
At a meeting with the head of Trade Promotion Organization of Iran, Mehdi Ghazanfari, Chief Minister of Astrakhan Markelov Alexovich said Iran is one of the main trade partners, Moj News Agency reported.
He also invited Iranian investors to establish auto-manufacturing production units in Astrakhan.
“Iranian traders and merchants could also offer their products, including tile, ceramic and bathroom accessories, in Astrakhan’s market and use the port’s warehousing facilities,“ he said.
Alexovich noted that the Russian port’s banks are also ready to offer banking services and facilities to Iranian investors interested in the port’s agriculture sector.
Ghazanfari, for his part, announced his readiness to boost ties in various fields, including the production of vegetables, fruits, agricultural machineries, medicine, textile and milk powder.
Expansion of ties between Iran and Russia’s Astrakhan Port could help establish the Caspian Sea Economic Cooperation Organization in the near future.
Ghazanfari said once the Astrakhan-Baku-Tehran airline and the Caspian Sea shipping lines are launched, tourism and transportation exchanges will increase between Iran and the Russian port.

BMI Sanctions
Political
The decision taken by the European Union (EU), and backed by the US, to sanction Bank Melli of Iran’s (BMI) foreign branches is a political action and not related to the bank’s performance.
According to Mehr News Agency, BMI Chief Mahmoud Reza Khavari also said on Monday that the bank has filed a complaint against the EU over the sanctions.
“Bank Melli Iran has to stand up and defend itself in order to lift the sanctions against the bank’s foreign branches,“ Khavari said.
Last year, the EU slapped sanctions against BMI and froze the funds and assets of the bank in Europe.
As a result of EU sanctions, the bank’s branches in European cities of London, Hamburg and Paris ceased operations.
Tehran has called EU sanctions ’illegal’, saying they will not help create an atmosphere for a diplomatic resolution.
Iran’s Foreign Ministry spokesman at the time, Mohammad Ali Hosseini said the sanctions were “meaningless and contrary to international law“.
“The sanctions are illegal and show the EU’s double standards,“ he added.
In recent years, the US has accused Iranian banks, including BMI, of providing financial services to what it terms “Iran’s nuclear and ballistic missile programs“.
In a statement published on its website, BMI refuted the US allegations and categorically denied involvement in any “deceptive banking practice“.

Agrofood 2009 Underway
By Sadeq Dehqan

The 16th International Food Industry Machineries (Agrofood 2009) is being held at Tehran Permanent Fairgrounds during May 24-27 with attendance of 750 domestic and foreign firms.
Close to 445 domestic firms and 260 foreign firms from 24 countries have taken part in the four-day event.
The exhibition aims to create competitiveness in food industry and promote production and exports.
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Agrofood 2009 aims to create competitiveness in food industry and promote production and exports. (Photo by Ali Hassanpour)
Huge Enthusiasm
A senior official in charge of foreign and local exhibitions told Iran Daily that Agrofood 2009 is considered as the largest food industry fair across the region and has been warmly received by foreign firms.
Kazem Akbarpour added that considering the huge enthusiasm of domestic and foreign firms to attend the exhibition, only qualified and creditable firms have been invited.
Iran has taken great steps in promoting technology of manufacturing food industry machineries, he said, noting that currently the country exports food industry and packaging machineries to different nations such as UAE, Pakistan, Afghanistan, Syria and Venezuela.
Amir-Hossein Kashefipour, manager of a packaging machinery manufacturer firm, said the technology for production of food industry machineries used to be imported from abroad, while currently the technology has been indigenized.
Stressing that domestic products are still far behind the global standards, he said foreign machineries are in better conditions in terms of their packaging designs.
He referred to volatility in price of raw materials, lack of an integrated management system and absence of permanent laws as the problems facing production sector.
In addition, customs regulations and tariffs change day by day, incurring huge losses to producers, he said.

Low Import Tariffs Criticized
Kashefipour noted that the tariffs for importing food industry machineries are between 16 and 25 percent which is a meager figure. This is while the government has put a 200-percent tariff for car imports in an attempt to support domestic car industry.
Another manufacturer said that the production of food industry machineries is progressing well, preventing forex flight from the country.
Bijan Riahi added that since the country has not reached a satisfactory level in steel sheets production, manufacturers have to import them.
He called improper supply of raw materials and difficult conditions for receiving loans as obstacles facing the production of machineries.
If manufacturers are provided with financial facilities, domestic production will progress, he added.
Hossein Pirmoazzen, manager of a food-processing firm, believes that poor supervision on imports of food industry machineries has triggered the imports of low-quality machineries particularly from China. Although Chinese machineries are warmly received by food-producing firms due to their cheap prices, they are in poor conditions, he added.

Agricultural Ties With Paraguay
Iran and Paraguay reviewed ways of expanding agricultural cooperation.
At a meeting between Paraguay Agriculture Minister Enzo Cardozo and Iranian Ambassador Mortaza Tafreshi, the two sides announced determination to boost ties in various fields of agriculture including inputs, outputs and machineries, Moj News Agency reported.
The Iranian ambassador announced his country’s readiness to share its training and research know-how with the African country.
Tafreshi also regarded the recent visit of an Iranian agricultural delegation to Paraguay effective.
The Paraguayan minister, for his part, called for a better cooperation with Iran, saying that his country is one of the most important food producers and keen on meeting Iranian food requirements.
Both side also called for more exchange of agricultural experience and expertise.

Large Ship Anchors At Rajaee Port
A large ship with a capacity of 9,000 twenty-foot equivalent unit (TEU) anchored at Shahid Rajaee Port in southern Hormozgan province, a port official announced on Monday.
Hossein Cheraghi said the ship belongs to Mediterranean Shipping Company (MSC), the world’s second largest shipping line, Mehr News Agency wrote.
It is the largest vessel that has ever entered Shahid Rajaee Port, he added.
The vessel will unload 290 TEU containers and will load 465 TEU containers during its stop at the port, the official noted.
He said the entry of such vessels will make Shahid Rajaee Port the region’s transshipment hub.
Earlier, Ports and Shipping Organization (PSO) official said four port cities have signed seven sister city agreements with foreign counterparts since the victory of the Islamic Revolution in 1979.
Mohsen Sadeqifar, the director for transit and tariff affairs at the PSO, told Mehr News Agency that Shahid Rajaee Port became the sister city of Slovenia’s Koper and Syria’s Tartus; Bandar Anzali signed agreements with Kazakhstan’s Aktau and Russia’s Olya; Bandar Imam Khomeini became the sister city of Syria’s Tartus and Al-Ladhiqiyah, and Amirabad Port signed agreements with Kazakhstan’s Aktau.

Iran 39th Industrialized Country
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Iran was ranked 39th in terms of industrial production.
According to a report by Economist, Iran has been ranked 39th for producing $23 billion of industrial products in 2008.
The United States of America with $1,738 billion of industrial products was ranked the first industrialized country in the world.
After the USA, Japan with $952 billion and China with $760 billion of industrial products were ranked the world’s second and third greatest industrialized countries.
Romania (with $24 industrial products) was ranked the world’s 38th biggest industrialized country, after which Iran stood with $23 billion production as the world’s 39th industrialized nation.
Germany, UK, Italy, France, South Korea, Spain and Mexico were ranked as 4-10 top industrialized countries.
Russia, India, Indonesia, Turkey, Malaysia, Norway and Greece were ranked 11th, 12th, 15th, 24th, 28th, 30th and 37th, respectively.
The value of the Islamic Republic of Iran’s industrial and mineral exports during the last four years exceeded $43 billion.
During the last four years, Iran’s non-oil exports stood at $54 billion of which 79.9 percent accounted for the export of industrial and mineral products.
Of the figure, some $1.752 billion of industrial-mineral products were exported to the United Arab Emirates, $1.225 billion to China, $1.211 billion to Iraq, $919 million to Japan, $765 million to India and $ 544 million to South Korea.
Iran’s industrial exports during the last four years show 193.6 percent growth over the previous 4-year period.

New Petrochemical Plants Due
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Iran sets to launch 10 new petrochemical plants and complexes this year. Managing Director of National Iranian Petrochemical Company Adel Nejadsalim said the new petrochemical projects are valued at $4.3 billion, Moj News Agency wrote
The projects include ethylene benzene and styrene monomer plant in Pars Petrochemical Complex with 1.245 million tons of production capacity (valued at $535 million); urea and ammonia plant in Pardis Petrochemical Complex with 1.755 million tons of production capacity (valued at $210 million); methanol plant in Zagros Petrochemical Complex with 1.650 million tons of production capacity (valued at $341 million); color alkali plant in Arvand Petrochemical Complex with 2.834 million tons of production capacity (valued at $1.612 billion); Morvarid Petrochemical Plant with 544,000 tons of production capacity (valued at $422 million), Mehr Petrochemical Plant with 300,000 tons of capacity (valued at $231 million); development of Mobin Petrochemical Plant (valued at $359 million); NPC developmental plans of Tabriz Petrochemical Complex with 54,000 tons of production capacity (valued at $35 million); heavy polyethylene plant in Amirkabir Petrochemical Complex with 300,000 tons of production capacity (valued at $309 million); and, butadiene plant in Jam Petrochemical Complex with 115,000 tons of production capacity (valued at $148 million).
In related news, managing director of Mahshahr Special Petrochemical Zone said two petrochemical projects with the investment of $2 billion would be operational in Mahshahr in southwestern Khuzestan province by March 2010.
The projects have witnessed a physical progress of 98 percent, Ali Yazdani said.
He added that the proposed projects are to produce some 3.1 million tons of petrochemical products, increasing the country’s petrochemical products up to 20 million tons.
The petrochemical products will be used in producing different kinds of pipes, insulations, kitchen tools, detergents, different kinds of films, and medical and plastic pieces.

Armenia to Export Electricity
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Armenia plans to start power export to Iran in near future, Armenian Energy Minister Armen Movsisyan said.
Armenia will deliver electricity to Iran in return for gas, he added, Moj News Agency wrote.
Movsisyan said Iran’s gas export to Armenia is carried out under “gas for electricity“ formula.
Tehran has already launched gas pump to Iran-Armenia pipeline and Yerevan will also start electricity delivery next month.
Iran and Armenia have so far inked agreements in the fields of banking, power plant construction, energy and trade.

Oman Ties
Meanwhile, Iran and Oman inked an agreement regarding the establishment of a joint $50 million investment firm for boosting and strengthening bilateral economic relations.
Mehdi Razavi, executive manager of Iran’s Foreign Investment Firm and Salem Ben Nasser Al-Ismaily, chief executive officer of the Omani Center for Investment Promotion and Export Development, signed the agreement.
“It is expected that the agreement will play a new role in expanding economic cooperation and the two countries’ trade ties,“ Al-Ismaily said.
The agreement will provide the two countries with more opportunities to invest in the different fields of industry, trade, house building, energy and transportation.

Construction Expo
The Sixth International Construction Exhibition is underway on Kish Island with the participation of 127 domestic firms and 58 foreign companies from 17 countries.

Shrimp Exports
Iran has exported 1,266 tons of shrimp worth $5 million from its southern Hormuzgan province to Oman and UAE during March 2008-9.

EconomyCol3
World Economy Stabilizing
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The world economy has avoided “utter catastrophe“ and industrialized countries could register growth this year, Nobel Prize-winning economist Paul Krugman said on Monday.
“I will not be surprised to see world trade stabilize, world industrial production stabilize and start to grow two months from now,“ Krugman told a seminar, Reuters reported.
“I would not be surprised to see flat to positive GDP growth in the United States, and maybe even in Europe, in the second half of the year.“
The Princeton professor and New York Times columnist has said he fears a decade-long slump like that experienced by Japan in the 1990s.
He has criticized the US administration’s bailout plan to persuade investors to help rid banks of up to $1 trillion in toxic assets as amounting to subsidized purchases of bad assets.
Speaking in UAE, the world’s third-largest oil exporter, Krugman said Japan’s solution of export-led growth would not work because the downturn has been global.
“In some sense, we may be past the worst but there is a big difference between stabilizing and actually making up the lost ground,“ he said.

UAE Bank Clients Leaving With Unpaid Bills
Some UAE banks are seeing up to 2,500 customers leave the country every month without paying off their credit-card bills, a number that could rise in June, a senior RAK Bank official said.
RAK Bank business adviser David Martin said most of those leaving without settling their credit-card bills were linked to the construction sector in Dubai, the hardest hit of the seven emirates that make up the United Arab Emirates (UAE) federation, Daily Star reported.
“On our credit-card portfolio, in common with other banks, we are seeing an increasing numbers of ’skips’--that’s people leaving the country without paying their bills,“ Martin said.
RAK Bank, which has around 20 percent market share in the country’s credit-card sector with around 300,000 customers, has seen around half that rate in the same period.

Iraqi Trade Minister Quits
Iraqi Prime Minister Nuri Maliki has accepted the resignation of his trade minister, whose ministry has been plagued by corruption allegations.
Abdul Falah Sudani has denied personal wrongdoing and departmental corruption, but his 14 May resignation offer was accepted after a grilling by MPs, BBC reported.
Iraqi investigators accused officials of accepting bribes in return for contracts relating to food imports.
The claims have led to the arrest of one of Sudani’s brothers. The Iraqi Trade Ministry is in charge of the country’s massive food rationing program and millions of dollars worth of grain imports.
Two of the trade minister’s brothers used to work as his aides. But they vanished in late April as they were about to be arrested. When Iraqi forces went to the ministry to deliver warrants for their arrest, they were greeted by gunshots fired into the air by the ministry’s own guards.
The two brothers escaped through the back gate, with one being arrested at a checkpoint later.

Ukrainian Gas Repayments Difficult
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The situation regarding Ukrainian payments for Russian gas is “very difficult“, the head of Russian gas giant Gazprom, said on Monday.
“We consider the situation concerning the payment for gas deliveries for the month of May very difficult,“ said Miller, raising fears of a fresh deliveries crisis. “If a problem comes up for the May deliveries, Gazprom would have every reason to call for (the gas) to be prepaid 100 percent“ in the future, he added, AFP reported.
Russian President Dmitri Medvedev had already expressed doubts on Friday about the ability of the Ukrainian energy company Naftogaz to keep up its payments.
He called on the European Union to lend Ukraine money to pay its bills and thus avoid a fresh gas crisis like the one in January.
That was when a pricing dispute between the two countries led Russia to shut down gas supplies across Europe in January, causing severe shortages in eastern EU states.

EU Urged to Cut Dairy Production
European Union officials in France say the union should alter its current dairy policy and cut production of industry goods to eliminate a global surplus.
Oliver Picot of the French Federation of Milk Industries said with European dairy sales limited despite steady production, action must be taken to avoid suffering additional losses, Euronews.net reported.
“A large part of French and European milk is exported to the rest of the world as butter or powder. These markets have collapsed. Historically, they’re at their lowest-ever level because China and Russia aren’t buying. Today, this is leaving a global surplus with huge losses for business,“ Picot said.