News Agency - Detail

NPC Driving Investment in Downstream Industries with Credit Offerings

NPC Driving Investment in Downstream Industries with Credit Offerings
(Tuesday, September 26, 2023) 22:12

TEHRAN (NIPNA) - Iran's National Petrochemical Company (NPC) has embarked on an ambitious initiative to revitalize its downstream industries by facilitating credit offerings through the commodity exchange market.

This move, with an estimated value of 7 trillion Iranian Rials (approximately $160 million), represents a significant step toward fostering growth and development in the country's complementary industries.

Abbas Gholami, the Director of Downstream Industries Development at NPC, outlined the company's strategic approach in a recent statement, underlining the twin pillars of identifying critical challenges in the complementary industries and providing credit-based solutions to bolster production units.

"In the thirteenth government administration, for the first time, the National Petrochemical Company has pursued two vital strategies in the field of downstream and complementary industries' development. The first step was the identification of the most significant issues facing these industries, followed by the presentation of credit-based solutions to boost production units," Gholami stated.

Highlighting the crucial role of the petrochemical industry in completing the value chain, Gholami explained that, legally, the responsibility for producing various petrochemical products falls under the jurisdiction of the Ministry of Petroleum. Completing the value chain means that petrochemical products reach their final destination through the commodity exchange market, where they are acquired by complementary industries for further processing into finished products or goods.

Gholami emphasized how this shift in strategy has distanced petrochemical production from raw material trading, resulting in increased value-added, job creation, and a boost in exports. He stated, "The execution strategy of transforming petrochemical products into finished goods has led to increased value-added, job creation, and the growth of exports."

Regarding the current challenges in Iran's complementary industries, Gholami pointed out that the most significant hurdle they face is capital procurement. Many producers lack sufficient liquidity to purchase raw materials, and securing the necessary financing from banks is often a difficult process.

Gholami explained that NPC's execution strategy for revitalizing semi-active or idle production units involves encouraging petrochemical companies to offer their products on the commodity exchange market for credit-based transactions. As a result of these efforts, several petrochemical complexes have started selling products through this mechanism, with a particular focus on methanol.

He further highlighted that this credit-based sales policy, led by NPC, is a pioneering initiative in the country. "We initiated measures last year to address the challenges faced by downstream petrochemical industries. In this regard, a trilateral agreement was signed between NPC, banks, and associations, exemplified by the agreement signed with Iran Plast," said Gholami.

Before the signing of these agreements, the volume of credit-based transactions on the commodity exchange market was quite limited. However, data obtained from petrochemical companies and the commodity exchange market indicates a substantial increase in the value of credit offerings, rising from less than one trillion Iranian Rials to over 7 trillion Iranian Rials in the current year.

Furthermore, Gholami revealed that NPC is set to sign another trilateral agreement with the Ministry of Industry, Mine, and Trade to support the development of complementary industries. He stressed that NPC is committed to creating added value and enhancing the complete production chain of petrochemical products.

"In line with these objectives, we have formed a joint committee with the Organization of Industrial Towns. This committee will identify surplus products in the petrochemical industry and, through provincial and national conferences, introduce investment opportunities in the development of complementary industries to potential investors," Gholami concluded.

The National Petrochemical Company's innovative approach to driving investment in downstream industries through credit offerings on the commodity exchange market is expected to pave 
Email is required
Characters left: 500
Comment is required