Monday, October 16, 2023
The I.R. National Development Fund Committed to Recovering its Resources from Debtors; Not Backing Down The I.R. National Development Fund Committed to Recovering its Resources from Debtors; Not Backing Down
By kangarloo-a @ 2:14 PM :: 224 Views :: 0 Comments :: Article Rating :: News

According to the Public Relations of the fund, Mehdi Ghazanfari emphasized the significance of the memorandum of understanding signed between the National Development Fund and SATBA. The memorandum aims to finance renewable power plants using the fund resources. During the ceremony, Ghazanfari stated that the signing of this memorandum marks a significant milestone in the field of renewable energy. The National Development Fund has taken a commendable step by providing five billion dollars to support renewable energy. While additional resources may be required, this can be interpreted as a positive start. Initially, the financing was planned to be two to three billion dollars, but SATBA increased it to five billion dollars.

The Iranian Ministry of Energy and the National Development Fund; Two Different Experiences

Expressing optimism about the successful implementation of the agreement Ghazanfari noted that the National Development Fund and the Ministry of Energy have had two distinct experiences in the case of providing loans to renewable power plants, which were repaid promptly and fostered trust in the fund. However, meetings with the Ministry of Energy did not yield conclusive results, prompting the speaker to disclose this to the media.

He then shared the second experience with fossil power plants and how it led to a change in the financing model of these plants. Last week, I-HOPE, a new financing model contract was signed between the fund and Foolad Khuzestan Co. The National Development Fund has been instrumental in supporting power plants, having financed 46 projects worth $4.6 billion since 2015. However, only $1.2 billion has been repaid, of which power plants paid back only $100 million.

The CEO of the National Development Fund expressed dissatisfaction with the current conditions and appealed to the Energy Minister for assistance in repaying the fund's resources. Failure to repay the $3.7 billion owed to the National Development Fund will render it unable to provide new loans similar to those in the past, with a financing model instead being provided through I-HOPE. The National Development Fund has no interest in acquiring assets as it seeks to avoid entering the business sector.

Ghazanfari emphasized that the National Development Fund should not be involved in the recovery of its resources from power plants. The decision to return the official exchange rate to power plants was made during the previous administration. However, this matter falls under the jurisdiction of the Central Bank and the Ministry of Energy, requiring no interference from the fund. The fund may have to confiscate assets or take ownership of power plants, which it will do when necessary. Once a buyer is found, the power plant will be sold.

We are advocating for the approval of Article 14 of the seventh development plan. In reference to the seventh development plan, we have requested that the National Development Fund be given greater trust. However, Article 14 has yet to be approved. The fund has proposed that all oil revenues be deposited into its account, with the fund investing the capital and paying its profits to the government as part of the budget. This is because the fund views oil revenues as capital, rather than wealth, and it is necessary to transform this capital into wealth.

We advocate for the approval of Article 14 of Iran's Seventh National Development Plan

 In reference to this plan, we have requested that the National Development Fund be given greater trust. However, Article 14 has yet to be approved. The fund has proposed that all oil revenues be deposited into its account, with the fund investing the capital and paying its profits to the government as part of the budget. This is because the fund views oil revenues as capital, rather than wealth, something that must be transformed into wealth.

"According to Article 3 of the Seventh Development Plan, the National Development Fund is authorized to invest in oil fields and utilize the profits to settle its outstanding demand of 100 billion dollars from the government. The Ministry of Petroleum is expected to play a more active role in executing the necessary approvals. It is hoped that in future meetings, there will be no need to remind certain individuals about the importance of cooperation," the Chairman of the Executive Board of the National Development Fund added.

According to Ghazanfari, the National Development Fund has the potential to address the issue of insufficient finance in the country by encouraging all debtors, including the government, private sector, and public non-governmental organizations, to seek financial assistance from the fund.

He pointed to the clear distinction between production and development. The National Development Fund assumes the responsibility for development by providing resources to producers. In return, the producers are obligated to return these resources to the fund after the production process. This cycle of asset circulation enables the fund to allocate resources to all applicants, thereby fostering development. It is important to note that this process goes beyond mere lending and waiting for repayment.

The fund's Investment in the Expediency Council of Iran Confirmed

The Chairman made an official announcement regarding the approval of financing for public sector projects granted by the High Supervisory Board of the Expediency Council. He emphasized the significance of this board, stating that no individual should consider themselves exempt from its authority. The board serves as a crucial institution responsible for determining the compatibility of projects with established policies. In this case, the board has confirmed that the investment by the National Development Fund aligns with the fund's statute, as well as the policies outlined in the 6th and 7th development plans of Iran.

We refrain from allocating new resources until we have ensured the certainty of their return

 Ghazanfari emphasized that the National Development Fund will only approve a plan once it is confident about the return on investment. In the event that resources are provided to an institution, they will be reclaimed from the same institution in a seamless and uncomplicated process, akin to the ease of making payments. Failure to establish such a system would result in the fund transforming into a foreign exchange reserve fund, necessitating its demise.

The National Development Fund's balance of the given debt

 He proclaimed that the government and the National Oil Company own the fund a total of 100 billion dollars, while the private sector and non-governmental institutions owe 13.3 billion dollars. It is important to note that this is a 160-billion-dollar fund, but having only 150 billion dollars in cash resources is not sufficient for economic success. Therefore, we must focus on launching different businesses to ensure our long-term viability.

The chairman continued: The money in the fund earns one percent interest at the central bank; this indicates the laziness of the fund because this is supposed to be an investment institution. We need to provide resources to producers in addition to making sure about repayment. Hence, we have designed the I-HOPE model to monitor the account and a given project.

When asked why the National Development Fund does not request its claims from the agent bank, Ghazanfari explained that a bank had been given 4 billion dollars by the fund, of which 2 billion dollars are currently overdue. We have notified the Central Bank to withdraw the necessary funds from the foreign and domestic currency resources of the agent bank and deposit them into the National Development Fund. However, the Central Bank responded that the agent bank's total assets only amount to 200 million dollars. It is important to note that validation should have been carried out when providing facilities to banks, which unfortunately was not done in this case.

He then highlighted the unparalleled contribution of previous managers in creating large companies and emphasized the institution's mandate to transform resources into lasting wealth, productive capital, and prosperity.

 

He further disclosed that the Board of Trustees passed a resolution last year to expedite the return of resources and that the fund has the authority to own assets or shares. As a result, the fund acquired 33% of the shares of the Sina Bank. However, the fund has no intention of engaging in entrepreneurship. Although there were several proposals for debt settlement, they were not in line with the fund's nature.

Deposit of One Trillion Dollars into the Stock Market

Ghazanfari revealed that the fund has deposited one trillion Tomans into the stock market intending to provide support. The decision was made by the Board of Directors of the National Development Fund to inject new funds into the market through the stabilization fund. This move is expected to have a positive impact on the stock market and help stabilize it.

The story of buying oil securities from the Ministry of Roads

He explained about the purchase of oil securities by the National Development Fund from the Ministry of Roads and Urban Development:

During a meeting attended by the First Vice President, financial institutions such as the Central Bank and the Planning and Budget Organization, the National Development Fund proposed to allocate two billion dollars to the Ministry of Roads and Urban Development to aid in the construction of four million housing units. Given the limited capacity of banks, the fund suggested taking possession of oil securities held by the Ministry of Roads as collateral to ensure repayment. This proposal was accepted, and the Ministry of Roads agreed to transfer the securities to the fund.

According to the CEO of the National Development Fund, the fund's governance system requires either the Board of Directors to grant permission or the Board of Trustees to determine the necessary actions. To this end, we have drafted a proposed resolution for the Board of Trustees and filed it to the Minister of Roads for approval. Once the Board of Trustees signs off on the resolution, it will be communicated to the fund and implemented accordingly. It is worth noting that the fund has not requested any amendments to its articles of association.