[R-G] FT: Ahmadi-Nejad Seeks Tighter Grip on Revenue

[Yoshie Furuhashi]

<http://www.ft.com/cms/s/0/6874ee38-88d1-11dc-84c9-0000779fd2ac.html>
Ahmadi-Nejad seeks tighter grip on revenue

By Najmeh Bozorgmehr in Tehran

Published: November 2 2007 03:13 | Last updated: November 2 2007 03:13

Mahmoud Ahmadi-Nejad, Iran's president, this week moved to consolidate
further his government's hold over the country's main sources of
revenue when he presented his nominees to take over as the oil and
industries ministers to parliament.

The move follows a recent cabinet reshuffle and the appointment two
months ago of a central bank governor seen as more sympathetic to the
president's economic policy. Analysts suggest that, if his ministerial
choices are approved, this will increase his influence over the top
three organisations that administer the country's resources.

Parliament will vote in the middle of the month on whether to approve
the new candidates, both of whom have served as acting ministers
following the resignation of their predecessors over the summer.

Gholam-Hossein Nozari is thought likely to win his vote of confidence
as oil minister but there are doubts about the proposed industry
minister, Ali-Akbar Mehrabian, an ally of the president, who may be
blocked for lack of experience.

The oil ministry generates the lion's share of Iran's revenues,
providing about 60 per cent of the government's budget and has been
the focus of several power struggles between the president and
parliament.

The previous oil minister was imposed on the president after
parliament rejected three of his nominees. Mr Nozari is believed to be
less hostile to the government's populist policies.

Analysts say he has been backed by one of the two main interest groups
inside the oil ministry – the National Iranian South Oil Company
(Nisoc) – which is the biggest subsidiary of the National Iranian Oil
Company and deals with onshore projects in southern Iran.

Mr Nozari was head of the Nisoc's intelligence department during the
previous reformist administration and it was under his direction that
Nisoc complained about an "oil mafia", which it said awarded contracts
to western oil companies, including Royal Dutch Shell, when it should
have been giving them to local entities.

The oil ministry is projected to earn about $70bn (£34bn) by March 20
when this Iranian year ends – far beyond its budgetary needs. Many
economists have blamed the government for failing to channel surplus
oil revenues towards productive sectors, using them instead for
day-to-day spending, which has led to record levels of liquidity.

The ministry of industries and mines oversees Iran's biggest factories
through two holding companies: the Industrial Renovation and
Development Organisation, which handles car factories producing more
than 1m cars annually, and the Iranian Mines and Mining Industries
Renovation and Development Organisation.

The two ministries are set to carry out most of Iran's privatisation
programme, disposing of companies worth hundreds of billions of
dollars. "Ahmadi-Nejad is trying to have as much control as possible
on financial resources not to let them go to [critical] political
groups in times of election," said one economist.

--
Yoshie
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