A New Fund for Petrochemical Industry

A minimum of $74 billion worth of investment is required to realize the targets of the Vision Document, says Mohammad Reza Saroukhani, the head of Bank Mellat.
Saroukhani presumes that infrastructure industries including mine, oil and gas, energy, telecommunication and transportation are often financed through big financial projects, as these sectors were financed as much as $280 billion in 2013, half of which attracted by drilling, petrochemical, oil pipelines and gas and oil refinery and storage industries.
The managing director of Bank Mellat added: "These sectors are hungry for investment, and are financed through a variety of ways such as bank resources, bonds, shares and the government's funding. Currently, around 60 percent of the budget of these sectors is financed via bank resources. Considering financial limitations and the increasing demand for investment in infrastructure industries, it is necessary to engineer and develop a finance framework in order to utilize a combination of financial resources. The private sector's cooperative models have been among the most frequent methods of financing infrastructure projects in the recent years."
Saroukhani continued: "Purchaser/provider, public-private partnership and privatization are the three popular models of financing in Iran. Public-private partnership, or PPP, is executed through joint-ventures. Joint-venture model is extremely globally popular as well. Around $500 billion worth of investment was made through joint-venture model in 2012 and this significant number is growing rapidly."
Saroukhani further stated: "Through a joint-venture, government grants the license and the private-sector executes the public-sector projects through design-build-finance-operate (DBFO) model with or without the government's financial contribution. The model enjoys the backing of banks and sponsors, as well as the potential of the capital market through issuing convertible bonds as a means of incentive financing. This is a highly suitable model for financing petrochemical companies and refineries due to its advantages."