Expert: Iran should lose in order to gain
Azerbaijan , Baku, March 17 /Trend T.Konyayeva/
To improve the investment climate, Iran should reconfigure their expenditures away form their nuclear program and focus on the development of the people and the industries that can be a significant source of income, Professor of Economics at the U.S. National Defense University and Georgetown University Paul Sullivan said on his own.
"Iran has wasted hundreds of billions on a nuclear program that has caused them nothing but hardship and grief," Sullivan wrote Trend in an email. "They should cancel the parts of the program that are not needed for electricity production and move on with the human development of their people."
The Iranian Petroleum Ministry currently can invest just $12 billion in oil industry from various sources so lack of adequate investment in oil industry is a serious problem, the spokesman of Majlis (Parliament) Energy Committee, Seyed Emad Hosseini said.
According to Hosseini, Iran needs to invest $142 billion for oil industry over the Fifth Five Year Development Plan (2011-2016) while Oil Minister Seyed Masoud Mirkazemi previously told Iran needs to invest $210 billion for its oil and gas projects during the above plan for building and upgrading refineries and oil and gas networks.
Iran 's official statistics reads the amount of direct foreign investment attracted from March 21st, 2010 to January 2011 is $2.7 billion.
According to Sullivan, that is a tiny amount for such an economy, and furthermore Iran likely needs to invest a lot more than amounts mentioned by Hosseini and Mirkazemi.
"Its greatest investment needs are in natural gas and this has been neglected for decades," he told.
In spite of being the second biggest producer within OPEC and boasting the world's second-largest natural gas reserves after Russia (29.61 trillion cubic meters), Iran imports natural gas for the domestic consumption from Turkmenistan and Azerbaijan. U.S. and U.N. sanctions deterring investment by Western firms with expertise and capital have slowed its development as a major exporter.
The sanctions of Western countries are believed to be a serious obstacle to the consistent increasing of investments in the key industries of gas, oil, petrochemical, metallurgical, and construction in Iran.
Concerning Iran's decision to publish oil and gas bonds as one of remedies to diversify its financial resources, Sullivan believes that bonds will bring Iranians into debt.
Last week Deputy Head of South Pars phases 12, 15, 16, 17 and 18, Mohammad Reza Zahiri announced Iran plans to sell bonds worth $13 billion to finance the development of phases 12, 15, 16, 17 and 18 of the South Pars gas field (one of the biggest Iranian gas fields) during the next Iranian year (starting March 21, 2011).
Earlier the Iranian deputy oil minister Mohsen Khojasteh-Mehr said that the ministry plans to issue Islamic bonds made available for the first time for the littoral Persian Gulf states and Middle East countries.
As regards contracts that some internal banks and Iranian Revolutionary Guard Corps's (IRCG) companies such as Khatam Al-Anbia signed to invest and develop Iran's energy sector, Sullivan thinks "there is a lot of bluff and bluster on these issues."
"They need to create jobs and hope for their people, not contracts that may never fulfill anything but filling the pockets of some of the elite," he told.
Late February Iran has awarded contracts worth $2.6 billion to Khatam al-Anbia, a company controlled by the IRCG. Khatam al-Anbia signed another $1.3 billion contract with the National Iranian Gas Co. soon to build a segment of pipeline to northwestern Iran that Tehran hopes could eventually take Iranian gas to markets in Western Europe.
IRGC, an Iranian elite unit, is the real power in society, which is represented not only in administration, but also in financial and commercial sectors. The Guard Corps has extensive economic interests in the defense materials, construction, oil and nuclear industry. Currently, its influence on the Iranian economy grows as many foreign companies have been unable or unwilling to compete for tenders because of the international sanctions.