By Pooya Stone
May 27, 2020
In its May 25 report, the research center of the Iranian Parliament (Majlis) announced that the National Iranian Oil Company (NIOC) owes $34 billion to the country’s banking system including the Central Bank of Iran (CBI).
The research center in the report titled “Energy Commission, Duties, Allowances, and Suggesting Priorities,” stated, “In such a circumstance, the oil company owes about $34 billion to the CBI and commercial banks for received facilities, as well as €2.5 billion and 109,000 billion rials for the issuance of forex and rial bonds, respectively.”
“Despite Iran’s long history in the oil sector, there is a serious dependence on foreign industries and related chains in various sectors. Part of the dependency of this industry is to provide financial resources. In general, in past years, more than 70 percent of the required resources in the upstream sector of the oil industry were attracted and provided through foreign investment.
“This figure has fallen sharply in recent years. As a result, the oil industry ran into serious problems, and the decline in crude oil exports in 2019 has also reduced the share of domestic resources to finance investment. It seems that employing more than 85 percent of the oil revenues in the government’s general budget is one of the main reasons for the lack of investment of resources in the oil industry. Therefore, most of the revenues will not return to the oil sectors as a profitable industry.
“The company’s lack of resources has led to the company’s large debt to the banking system, the National Development Fund, and private contractors; In this respect, the oil company is on the verge of collapse.” Notably, according to the budget bills, the NIOC receives only 14.5 percent of oil revenues.