NPC News Bulletin- Investments-April 2000

In the Iranian calendar year of 1378, which came to an end on March 20, 2000, the NPC's plans for arranging financing packages for developing its projects were fulfilled. According to NPC International, which is an NPC subsidiary responsible for arranging financial facilities and attracting foreign investment, NPC successfully concluded, during the past Iranian year, credit facilities equal to $1.24 bn. These facilities were arranged out of an authorization given by the Parliament to NPC. Based on Iran's Budget Law for the years 1376 to 1378, NPC was authorized to arrange Export Credit Facilities (ECAs) up to $1.95 bn supported by ECAs and secured by the guarantee of the Ministry of Economic and Finance Affairs. The credit facilities will be repaid through the export revenues of the implemented projects. With the credit facilities arranged during the 1378, the total amount of allocated budget of $1.95 bn was totally utilized. The credit facilities had been provided by twelve major international banks, supported by nine insurance agencies of the countries involved and managed by three Iranian commercial banks. The facilities serve 6 of the NPC's petrochemical companies for implementing 12 high-priority projects.

In 1999, NPC mandated Deutsche Bank to structure and arrange, in a consortium of international banks, a financing package covered by ECAs. According to a report by NPC International, an NPC subsidiary, the package is based on enhanced security structure and will incorporate buy-back elements, which initially will be repaid through the export of the NPC's existing products. In later stages, the export earnings of the projects implemented under the envisaged financing scheme will be used for repayment. The amount of the financing facility will be EUR 550 million consisting of ECA-covered and complementary uncovered commercial facilities. The tenor of the ECA-covered facilities is aimed at approximately 11.5 years with an 8.5 years repayment period. The facility will be used to finance a number of the NPC's development projects under a framework agreement to be concluded between NPC and the arranging banks. Several leading European banks have participated in the framework agreement as member banks to co-arrange the facility.

The National Petrochemical Company (NPC) and the Athens based Consolidated Contractors Company (CCC) have agreed to establish a joint venture company in order to participate in off-shore and on-shore petrochemical projects both in Iran and abroad. The JV company will take advantage of the experience gained by the Iranian engineering, construction and erection companies through their participation in implementing the NPC's projects. It will also benefit from the CCC's investment, management, and fabrication potentials.

The Islamic Development Bank (IDB) endorsed a $30 million finance facility for implementing Petrochemical Industries Investment Company's (PIIC) PET project. The 60,000-t/y joint venture facility is 60% owned by PIIC and 40% by foreign partners. It will be built at Bandar Imam Petrochemical Special Petrochemical Zone. PIIC was established in 1992 in conjunction with NPC's privatization plans. It is owned 24% by NPC with the remaining shares held by the private sector. PIIC has set up several new ventures and has acquired several downstream plants, which it operates on its own.

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