Iran: Economy during July 07

Published July 26th, 2007 - 01:26 GMT

Hybrid Cars: Iran’s largest auto manufacturing company, Iran Khodro, will start production of hybrid cars, which run on both gasoline and compressed natural gas (CNG), in early August. Iran’s auto manufacturers are obligated by a government plan to switch to hybrid cars over the next few years as a way to curb rising domestic gasoline consumption and also reduce air pollution by encouraging the use of clean energy. The main hurdle faced by the auto-manufacturers has been securing enough CNG tanks for their hybrid vehicles. Iran produces over one million vehicles a year while domestic production of CNG tanks has been lower than 100,000 units per annum. Iran Khodro, therefore, is in the process of setting up its own CNG tank producing company with a capacity of 250,000 units per year which will be operational by mid-2008.

Natural Gas Consumption: Iran is the largest third consumer of natural gas in the world, after Russia and the US, with over 109 billion cubic meters of consumption per year. This figure has risen by over 11% compared to the previous year. Iran’s strategy is to gradually shift its domestic energy consumption from oil and its derivatives to natural gas by extending its natural gas network across the country to all cities and also encouraging CNG fuelling of vehicles. This is to free more crude oil surplus for exports which are valued higher and could be exported more easily. Iran holds the second largest reserves of crude oil and natural gas in the world.

Soaring Energy Subsidies:  Iran paid a total of $42 billion in energy subsidies during 2006 which included subsidies on electricity, gasoline, diesel, and natural gas prices. From a total of $49 billion in annual subsidies allocated for energy, basic goods and services, agriculture, medicine, publication and paper, more than 85% was spent to meet the energy needs of the country. It is worth noting that this figure almost equals the country’s revenue from its main source of income, exporting oil!

Privatization of Petrochem Firms:  many of the subsidiaries of Iran’s National Petrochemical Company (NPC) will be privatized during the current Iranian year. While NPC keeps 20% of its holdings in these companies, 40% of the shares of the firms will be allocated to underprivileged citizens under the Justice Shares scheme adopted by the government. Another 35% of the shares will be offered for the first time on the Tehran Stock Exchange, and the remaining 5% will be distributed amongst the personnel of each company.

Iranian Power Plant for Iraq: a consortium of Iranian companies has been able to win an international tender for construction of a gas-based power plant in the Iraqi city of Sadr. The power plant will have two gas-based units each producing 157MW of electricity per annum and will take around two years to complete. Iranian consortium consisted of Saneer, Ameran Ofogh and MAPNA (Iran’s Power Plant Project Management Company).

Foreign Assets:  According to the figures published by the Central Bank of Iran (CBI), the value of Iran’s foreign assets grew by around 30% to over $62 billion during the past Iranian year (ended 20 March 2007).

About Turquoise: Turquoise is a boutique investment bank based in Iran with offices in Tehran and London. Turquoise publishes Iran Investment Monthly with the aim of keeping its recipients updated on the latest macroeconomic developments in Iran, providing an in-depth analysis of the Tehran Stock Exchange as well as introducing new financial products and private equity opportunities to potential investors. For more information please visit:

© 2000 - 2022 Al Bawaba (

You may also like


Sign up to our newsletter for exclusive updates and enhanced content