Iranian petrochemical units, refineries owe $8B to Oil Ministry

Oil&Gas Materials 14 December 2014 19:17 (UTC +04:00)

Baku, Azerbaijan, Dec. 14

By Umid Niayesh - Trend:

Iranian petrochemical units and refineries owe $8 billion to the country's Oil Ministry for the feedstock, the Islamic Republic's Fars news agency reported Dec. 14.

Petrochemical units always pay the price of the feedstock with a 1-2 months delay. The figure reaches $5 to $6 billion, according to the report.

The second part of the debts equal to almost $3 billion remains from the last year due to differences between the oil ministry and the petrochemical units over the foreign currency price.

The Iranian administration canceled its fixed, subsidized rate for the dollar in 2013.

Iran's central bank removed the cheap-rated US dollar (12,260 rials/USD) in July 2013 from its website and officially adopted a single rate. Before this move, the government applied different exchange rates depending on the type of business seeking currency. Petrochemical units and refineries were given access to currency at lower rates.

The disagreement between the oil ministry and petrochemical units is due to the sides' different understanding from the time of the implementation of the new rate for USD.

Iranian MP Jafar Qaderi earlier said that the administration is working on a plan, according to which Oil Ministry will supply petrochemical units and refineries with feedstock through opening letters of credit (LCs).

Currently, there is no specific mechanism in Oil Ministry to deal with petrochemical units and refineries to settle their debts, he noted.