TEHRAN, Jan. 16--Given the surge in prices of gasoline and oil derivatives based on the FOB Persian Gulf and wholesale rates, it is likely that the government will face a deficit of $3.5 billion during the fourth five-year development plan (2005-2010).
Expressing this view, Head of the Parliament Development Commission, Ali Akbar Aqaie, told ILNA on Sunday that to attain its projected revenues and to cover for its current expenditures, the government does not seem to have any choice but to raise its current finances to offset a possible deficit. "One way to overcome a financial deficit is to pay off the damages caused by elimination of subsidies."
Aqaie contended that fixed prices of petrol and oil by-products will help bring inflation down. "This would cause a downturn in prices in other sectors as well, including house prices."
The MP said an unchecked rise in prices of residential units naturally pushes up inflation, in which case all government plans to stabilize prices will fail.
He added providing safety and precautionary transport facilities, eliminating accident-prone regions, phasing out dilapidated transportation fleet, rendering financial assistance to low-income families to help them overcome rise in the cost of living are among the inevitable state expenses for which the government needs to find sources of funds for.
The sixth Parliament approved a $127 billion national budget for 2004-2005.
The budget figure is $10 billion higher than what the government requested, and represents a 13.5 percent increase from the previous budget, with deputies adding funds to encourage foreign investment, reduce unemployment and complete several state infrastructure projects.
The budget predicts economic growth of 7.4 percent in the next Iranian year, which begins on March 20.
Iran's $127 billion budget for 2004/2005 reportedly was calculated on the basis of $19.90 per barrel in Iranian crude oil. This compares to an average price for Iranian crude oil in 2003 of around $26 per barrel, and a forecast price for 2004 of around $30 per barrel. Budget deficits have been a chronic problem in the Iranian budget, in part due to large-scale state subsidies--totaling some $4.7 billion per year--including foodstuffs and particularly gasoline.

BOJNOURD, South Khorasan, Jan. 16--An economy official said here Saturday the volume of foreign investments topped $ 4.3 billion in the first three quarter of the current Iranian year (started March 20), IRNA reported.
Deputy Economy and Finance Minister for human resources, development and management affairs Kamal Taqavi-Nejad said that the leader of Islamic Revolution has stressed on expediting the implementation of foreign investments projects, so that their positive impacts will benefit the nation.
He said that the gross domestic product (GDP), which was targeted at six percent in the Third Five-Year Development Plan (March 2000-2005) has averaged 5.6 percent, meeting about 95 percent of the target. "The rate of the net capital formation which was estimated at seven percent has toped 10 percent in the same period."
He further referred to the government's success in controlling inflation and reducing unemployment. The infrastructure-related reforms and steps taken for bureaucratic changes have prepared good grounds for the future government, he added.
The official further alluded to the success in downsizing government saying that the privatization drive has gathered momentum and was five-fold the figure recorded in March 2003-2003 compared to the year earlier. This trend also continued last year, he said.
Furthermore, over 96 percent of the projected tax revenues have been realized in the first three quarters of the current year registering a 40 percent increase compared to the same period last year.
The serious attention paid by the government to economic reforms including unification of foreign exchange rates, gradual removal of non-tariff barriers, ratification and implementation of foreign investments law, new tax reform laws, eliminating financial collateral for exports, strengthening of capital markets, establishing banks, and using foreign exchange reserve funds for economic stability are all positive steps to ensure growth of foreign investments, he said.
Another economy officials said here Friday that although people may have different views on foreign investments in the country in the coming years, its trend is irreversible.
Deputy Economy and Finance Minister Saeed Shirkouvand told IRNA that various political factions and economic tendencies may for a short period, through issuing directives and backing anti-growth policies, slow down the foreign investment process, but its effect cannot last long.

Gasoline consumption rate in Iran is almost twice the gross domestic product growth rate.

TEHRAN, Jan. 16--Oil Minister Bijan Namdar-Zanganeh here on Sunday disclosed that possible rationing of gasoline from the next Iranian year (starting March 20) will require issuance of smart cards.
In an interview with Fars news agency on Sunday, Zanganeh said based on a state-proposed plan, domestically-produced petrol will be rationed, while imported gasoline will be sold at the final price of the product, which includes transportation and distribution costs.
"The plan, if approved, will be come into effect by October at the latest."
Gasoline consumption rate in Iran is almost twice the gross domestic product (GDP) growth rate.
Asked to envisage the final price of imported gasoline, he said no prediction can be made about the future price but currently, every ton of imported gasoline costs the government $450, excluding transportation and distribution charges.
"Based on our estimates, the government is likely to face almost $500 million in deficit for gasoline imports," he said, noting that no plans have been made on the ways to secure the extra funds.
The minister further said that if global oil prices rise next year, surplus revenues would be deposited in the state account and not the Oil Ministry's.
Improper gasoline distribution system, defective engines, dilapidated cars, low prices of fuel as well as smuggling were mainly responsible for the growth in the consumption rate.
Namdar-Zanganeh ruled out any further rise in petrol prices next year, saying the rate will hover around 800 rials per liter.
Officials predict daily gasoline consumption is expected to double in the near future, reaching 50 million liters per day.
Iran, the world's second largest oil producer, imports a considerable amount of its domestic fuel needs. Each year, the government imports up to nine million liters of gasoline to meet domestic demand.

TEHRAN, Jan. 16--Austrian oil and gas company, OMV which is Central Europe's leading oil and gas group, has made its first oil discovery in Iran's western region of Zagros, ISNA said.
OMV's Onshore Exploration GmbH, a wholly owned subsidiary of OMV, has completed its first exploration well in the 'Mehr' block reaching a depth of 4,148 meters.
The 'Mehr Block' with an area of 2,500 kmà is located in Khuzestan province. Subsequent testing of the reservoir yielded an average flow rate of 1,040 bbl/day of 22¼ API oil.
In 2005, OMV plans to drill two more exploration wells on the same block to define the size of the oilfield.
Helmut Langanger, OMV board member responsible for exploration and production, said this discovery provides the basis for further OMV exploration in this oil-rich region.
"This is an encouraging find, underlining the excellent work of our people active in Iran and our use of cutting edge exploration technology."
National Iranian Oil Company (NIOC)'s Manager for Exploration Affairs Mahmoud Mohaddes told ISNA on Sunday that further details of the discovery will be announced within a few months.
"The operation has been successful and the complementary reports on the amount and type of oil discovered and what the whole situation looks like will be announced in two months after approved by the Oil Ministry," he said.
OMV, with a 34 percent stake in the Mehr Block, acts as the operator of an international Joint Venture including Repsol YPF and Sipetrol (both 33 percent), and is looking forward to evaluating the commerciality of the field.

MADRID, Spain,
Jan. 16--Cuban Agriculture Minister Alfredo Fredal in Havana on Saturday lauded the impressive progress achieved by Iran in the agriculture sector, according to IRNA.
The Iranian embassy in Cuba reported that in a meeting with Iranian Ambassador to Cuba Ahmad Edrissian, he said Cuba is interested in utilizing Iran's experiences to increase productivity in agriculture and irrigation network, 'particularly, the valuable lessons it has gained during the droughts that hit the country in recent years'.
He said the two sides will focus on agriculture cooperation in the next session of the Iran-Cuba Economic Cooperation Commission session to be held in Havana.
The Iranian ambassador said that grounds exist for cooperation in animal husbandry and farming. He also called for sharing experiences in other areas including sugar cane production.
Edrissian also said the upcoming visit by Iranian Agriculture Jihad Minister Mahmoud Hojjati to Havana to participate in the joint commission session will provide brighter prospects for bilateral cooperation.
The two nations have also embarked on boosting cooperation in other sectors.
Edrissian and Cuban Minister of Industry Yadira Garcia reviewed in Havana last week ways for Iran to assist in the maintenance, renovation and modernization of Cuban electricity sector.
Cuba is to convey its needs in the electricity sector to Tehran at the Iran-Cuban Economic Cooperation Commission meeting.

Shares of state-owned automobile manufacturers Iran Khodro and SAIPA will be ceded to private ownership by 2010.

TEHRAN, Jan. 16--A top privatization official has said that up to 40 percent of shares of state-owned automobile manufacturers Iran Khodro and SAIPA, will be ceded to private ownership by the end of the fourth five-year economic development plan (March 2005-2010).
In an interview with ISNA, advisor to minister of industries and mines for privatization affairs, Iraj Akbarieh, defended the ministry's privatization performance, saying the ministry is ahead of the target, while conceding the Industrial Development and Renovation Organization is somewhat behind schedule.
According to government estimates, he said, Mines Development and Renovation Organization is to transfer 3,000 billion rials worth of shares by March. "However progress has been faster than expected and more than 4,600 billion rials worth of shares have been ceded to the private sector so far, while the figure is likely to exceed 5,000 billion rials by March."
Akbarieh said once the State Expediency Council approves a plan to turn over shares of Mobarakeh Steel Mills Company, the ministry will facilitate privatization of up to 500 billion rials, (five percent of total shares) of the company's shares through the stock exchange.
The plan, he said, obliges the Ministry of Industries and Mines to hand over 6,000 billion rails worth of its share the private sector which is likely to materialize without putting shares of Mobarakeh Steel Company up for sale.
On the slow pace of privatization, Akbarieh said, due to massive capital demand to fund projects, required advanced technology and delayed profitability, the private sector might not be ready yet to assume full responsibility. "Therefore, only 50 percent of shares of newly formed sectors such as copper and aluminum will be privatized," he said.

TEHRAN, Jan. 16--The 13th International Oil, Gas and Petrochemical Seminar will be held at the Organization of Islamic Conference Summit Hall from Jan. 24-26.
This year, technologies required to facilitate surplus tapping of Iran's oil inventories will be among the topics discussed, said a press release faxed to Iran Daily on Sunday by Public Relations Office of Oil Industry Research Center.
Past seminars have mainly covered topics related to activities of up-stream oil industries such as exploration, production and development of hydrocarbon resources.
Statistics provided by the center, the oil sector's recovery is much lower than global standards. The report further said that a meager one percent increase in the coefficient rate would earn the country almost $170 billion extra given the current oil prices.
Domestic and foreign experts are scheduled to participate in the seminar.
Others issues to be discussed will include gas injection into fractured and unfractured reserves, reserve management, thermal techniques for production of heavy oil, ... etc.

TEHRAN, Jan. 16--Iran lacks handicraft exports and any statistics in this respect are simply untrue, observed a member of Antiques and Handicrafts Guild Union Sunday, asking those who claim otherwise should come up with proof.
Asked to expound on the $500 handicrafts exports officially announced for the last year, Hassan Shilchi told Mowj news agency that certain people describe the sales of some Iran-made stuffs in a grocery store in Frankfurt, Germany, as exports.
He stated that the Handicraft Organization should be closed down since its policies have pushed the sector to the verge of bankruptcy. At present, the organization owes between 60 to 70 billion rials to handicraft artistes. "The organization is defunct," he emphasized.
Shilchi noted that despite the support and cooperation of the private sector, the organization is interfering in their affairs by opening state-owned handicraft shops.
Responding to a question about the status of Iranian handicrafts in the world, he said the country has no place in the global handicrafts market.
Shilchi blamed the Handicrafts Organization for the failure.
In the pre-revolution era, he said, the then government paid due heed to craftsmen and injected life into the sector. In the post-revolution period, the handicrafts organization has failed to effectively support the sector and its policies are in tatters. "Just every six months, a new head has been appointed to prop up the industry," he mentioned.
Handicrafts Organization was officially established in 1969 under the auspices of the Ministry of Industries. Although the establishment of this organization meant that domestic artisans had an independent entity directly supervising their activities, which has continued to this day, the handicrafts organization has not been able to fulfill its duties in an effectively.
There are about two million people involved in the handicrafts sector nationwide.