According to the Public Relations of the National Development Fund, Mehdi Ghazanfari, in an appearance on the economic program "Forsat" with the topic of the role of the National Development Fund in major infrastructure investments, emphasized that the charter of the National Development Fund is developmental and preservative. He expressed, "What has transpired in practice is something else. The National Development Fund was not originally intended for budget stabilization, but the country's exchange rate events have led governments to turn to the National Development Fund in the past 10 years, and two-thirds of its resources have been allocated to budget stabilization policies." He further mentioned that the National Development Fund is owed around $100 billion by the government. He stated, "One-third of the National Development Fund's resources have been allocated to the private sector and non-governmental public institutions, and have been used in projects related to power plants, steel, copper, etc." In this regard, a pipeline that transfers water from the Persian Gulf to the Iranian plateau, has also been constructed with the assistance of the National Development Fund.
New Governance for Participation in Projects by the National Development Fund
The CEO of the National Development Fund, stressing that the sudden increase in currency prices has caused recipients of the fund's facilities to face difficulties in repaying loans and fall into default, stated: Repayment has indeed become a challenge. Therefore, the National Development Fund has started to examine how it can have greater control over resources in order to guarantee the return of capital. Based on this, it has been decided that, like other sovereign wealth funds in the world that invest themselves, the National Development Fund will also enter this field and participate in projects. Ghazanfari clarified that the National Development Fund's pattern is not like Shasta or pension funds, as those funds become 100% owners of companies, whereas the National Development Fund does not engage in ownership of companies, but rather partners in production and sales. It investigates whether the resources provided to the applicants are being utilized properly. Additionally, the National Development Fund has an exit strategy and determines when it will exit a project at the start of its participation. It defines the time frame for its presence. Furthermore, the National Development Fund does not propose industrial projects in many cases; rather, for instance, the private sector has a project, and the National Development Fund evaluates it and supports it if deemed desirable.
Invitation to Compatriots Abroad for Collaboration with the National Development Fund
The President of the Board of Directors of the National Development Fund announced the potential for compatriots residing outside the country to collaborate with the fund and stated, "If compatriots abroad are interested in investing either within or outside the country, the opportunity for collaboration with the fund is available to them." However, it is not necessary for them to participate solely in projects proposed by the National Development Fund.
Ghazanfari continued: These individuals can establish contact with the fund through Iranian embassies abroad or the communication channels provided on the National Development Fund's website.
Possibility of Issuing Guarantees by the National Development Fund
He mentioned the possibility of issuing guarantees by the National Development Fund and added, "For instance, if one Iranian has financial resources and another Iranian within the country intends to acquire these resources to develop a petrochemical or steel project, concerns arise when an individual abroad lends their financial resources to someone within the country – who guarantees that the money will be returned?" In this context, the National Development Fund can act as a guarantor.
The CEO of the National Development Fund continued, "In fact, the National Development Fund guarantees the Iranian residing abroad that if the loan recipient defaults, the fund will repay the loan."
Establishment of a Company to Offer Innovative Financial Instruments
Ghazanfari emphasized that the National Development Fund has obtained licenses for nearly all the instruments that banks can hold, stating, "This means that the National Development Fund can engage in a range of banking and exchange activities."
It must be noted that innovative financial instruments have become diversified and relying solely on bank loans is not enough. For this reason, a financial services company has been established under the umbrella of the National Development Fund to incorporate all these instruments.
Details of the Utilization of National Development Fund Facilities in Projects
Continuing, with reference to the IPS of the National Development Fund visible on the fund's website, he explained: Accordingly, 70% of the fund's portfolio is allocated to the energy sector, encompassing oil, gas, power plants, etc. About 20% of the facilities are earmarked for investment in mining, mineral, and metal industries such as steel and copper. Another 10% of the facilities will be invested in other industries, primarily knowledge-based industries. The CEO of the National Development Fund added, "Thus, projects with an investment volume exceeding $100 million are candidates for fund collaboration. Additionally, the fund will provide facilities in rial or foreign currency for SME projects."
Negotiations for Establishing a Fund to Finance Risky Projects
Ghazanfari further disclosed ongoing negotiations with several banks to establish a fund for high-risk projects and said, "Many young individuals pursuing knowledge-based industries require limited resources, and their numbers are significant. However, the fund does not intend to engage in a large number of projects. Therefore, we provide capital to interested entities, and they support projects using our resources." Accordingly, around 2 trillion rials through the Vice Presidency for Science and Technology and another 1 trillion rials through the Innovation and Flourishing Fund will be allocated to start-ups.
National Development Fund's 14.5% Stake in the Dasht-e Azadegan Project
Emphasizing the National Development Fund's unrestricted ability to provide facilities, it was stated that the fund must ascertain that a project has an appropriate capital return rate. In this regard, the National Development Fund has participated in the Dasht-e Azadegan project and holds approximately a 14.5% stake. Effectively, a consortium composed of the National Development Fund, banks, and E&P companies is involved.
The CEO of the National Development Fund added: The volume of investment in the country, especially during the 90s, did not even cover the depreciation of past investments. Hence, high growth rates in the subsequent years cannot be anticipated. One of the reasons the National Development Fund shifted toward investment is to contribute to higher growth rates. Ghazanfari referred to the Seventh Development Plan, stating: According to Article 3 of the Seventh Development Plan, in exchange for the $100 billion debt owed to the National Development Fund, the government intends to allocate its oil and gas fields to this fund, enabling the National Development Fund to gain a net profit of $100 billion through investment operations and exports.
Guaranteeing the Return of Capital and Profits for Foreign Investors
Continuing, he said: This message applies to compatriots in the Gulf region countries, wealth funds in these countries, and large drilling and oil extraction companies. If they intend to invest in Iran, they should identify the National Development Fund as their partner. The fund possesses extensive financial resources and is secure. I am confident that foreign investors are more concerned about whether their resources, along with profits, will be returned than about the risks involved, and the National Development Fund provides that assurance.
The CEO of the National Development Fund continued: Starting this autumn, as the fund takes control of oil fields from the Ministry of Petroleum, it will create unparalleled profitable opportunities. The distinction between the National Development Fund and the National Oil Company lies in the fact that the latter extracts oil and is obligated to allocate 40% of oil revenues to the General Development Fund and 60% to the government. However, all the resources the National Development Fund acquires from oil field development revert to this fund, and they can be utilized again for investment purposes.
Ghazanfari added: Furthermore, a proposal has been submitted by the fund to the government, as mentioned in the Seventh Plan, although it has not been approved. The proposal suggests that the government allocate all foreign currency resources from oil sales to the National Development Fund and have the fund pay $20 billion annually to the government for managing the country. If this mindset had emerged a decade ago, today the National Development Fund would possess $600 billion in assets.
