ISFAHAN, March 16--Iran has reportedly entered an agreement with Mexico to export liquefied natural gas (LNG) to the Latin American country.
Oil Minister Bijan Namdar-Zanganeh told Fars news agency on the sidelines of the groundbreaking meeting of OPEC oil officials in the central city of Isfahan that Mexico is willing to purchase gas from Iran, stressing that the two countries experts would begin their technical studies soon.
“The two sides would soon begin negotiations on relevant deal while experts undertake the technical aspects of the work, including the amount of gas (to be exported to Mexico),“ he said, declining to elaborate on the financial aspects of the deal.
Rejecting reports that the world oil market is facing an oversupply in the current year, Zanganeh said such estimates lack substance.
The minister said high oil prices are caused by growing concerns about a possible shortage of supply.
In related news, Zanganeh and his Indonesian counterpart signed an agreement for construction of an oil refinery in Indonesia.
The two countries would soon launch feasibility studies to build a refinery which will have a processing capacity of 300,000 barrels a day.
The National Iranian Oil Company and Pertamina of Indonesia will undertake the job.
The Naftiran Intertrade Company will hold a 30 percent share in the project.

TEHRAN, March 16--A total of eight billion dollars will be withdrawn from Foreign Exchange Reserve Fund to finance private sector projects in the year to March 2006, said the minister of industries and mines here on Wednesday.
Es’haq Jahangiri told ILNA that credits for some $5.5 billion had already been opened, underlining that the industries and mines sector has shown a 17-percent growth in the past five years thanks to the Foreign Exchange Reserve Fund loans.
“Foreign Exchange Reserve Fund is a golden opportunity for the private sector,“ he said, adding that the private sector has to be turned into a mechanism for industrial development and transfer of technology.
The minister further noted that the national industries would not have a say at the international level without private sector participation.
“The Ministry of Industries and Mines has given top priority to renovating the industries,“ he said.
The government would have to withdraw an extra $4.7 billion from the Foreign Exchange Reserve Fund to offset huge budget deficit that would follow the parliamentary decision to keep prices of major consumer goods unchanged during the March 2005-2006 fiscal year.
Experts have warned that a multibillion-dollar withdrawal from the fund would lead to a further rise in inflation.
To strong opposition from the conservative-dominated Parliament, the Khatami administration has been trying to weaken the rial to offset its budget deficit following the failure to encourage car imports in the past 12 months. The parliament finally managed to fix the parity rate of greenback against the national currency at 9,090 rials for each US dollar, allowing the rate to fluctuate only by five percent.

TEHRAN, March 16--A senior Ministry of Economic Affairs and Finance official said here on Wednesday that the total capital of banks has increased by six-fold, adding, however, that Iranian banks do not yet enjoy a high international status due to low capital.
Seyyed Hamid Pour-Mohammadi, deputy minister for banking, insurance and state companies’ affairs, told ISNA that the total capital of state banks has increased from 14 trillion rials to 91 trillion rials. “The General Assembly of Banks met a few days ago and decided to increase the capital,“ he said, stressing that there are plans to make the total capital held by the banking system more transparent.
The official further noted that a team of university professors and bank officials are working on a project to assess the performance of each bank. “The team has so far realized that Bank Melli Iran has had the best performance,“ he said, adding that a comprehensive report is expected in the near future.
He said Iranian banks are unable to render large loans due to shortage of capital.
Many experts believe that the key to a rapid progress in the country’s lethargic banking system lies with the presence of foreign banks in Iran.
Central Bank of Iran (CBI) governor made it clear recently that no one is against the establishment of foreign banks in Iran, but said foreign banks have to comply with the usury-free Islamic banking system, if they are going to work here.
An international bank would soon open its branch in the country, said Ebrahim Sheibani, adding that the establishment of foreign banks in Iran could help improve foreign investments and create jobs.

Chicken meat production in Iran is 50 percent higher than that of other counties.

TEHRAN, March 16--A senior official said here on Wednesday that the poultry industry with an annual financial circulation of 20 trillion rials is Iran’s largest industry second only to the automotive industry.
Ali Azarvash, secretary of Poultry Association of Iran, told Fars news agency that Iranian poultry farms receive little support from the government, whereas in other countries like Brazil, the industry gets huge state subsidies.
He, however, said Iranian poultry industry has attained self-sufficiency, stressing that the import of chicken and eggs has come to an end.
“Poultry industry has created 600,000 jobs in Iran,“ he said, adding that some 300 million rials has to be spent to create each employment opportunity in this sector.
The official further noted that the government’s inattention to poultry sector is to blame for the price hikes for chicken.
Azarvash said if the government refuses to purchase surplus chicken from farmers, many would be unable to continue their business.
He said chicken meat production in Iran is 50 percent higher than that of other counties.
Iran’s white meat, dairy and other animal products in the year to March exceeded 9.4 million tons indicating a growth of six percent increase compared to the figure for the previous year.
The figure includes 1.2 million tons of poultry meat, 780,000 tons of red meat, 6.7 million tons of milk, 640,000 tons of eggs and around 30,000 tons of honey.
Self-sufficiency has been achieved in milk, egg, poultry meat and honey production.

Compared to earlier periods, the Third Development Plan (March 2000-2005) was a turning point in the history of national insurance industry. Several major structural and quality developments and reforms took place during this period and for this reason it can be claimed that Iran’s insurance industry is now much more profitable entity than its counterparts in the rest of the world.
Abdolnaser Hemmati, managing director of Central Insurance of Iran, explained the condition of the insurance industry in the Third Plan and evaluated its position in future programs.
He spoke positively about the performance of the insurance industry and said given a three-year investment it would witness far better results.
The official said the most important reason for the structural development of the insurance industry was the activities of the private sector.
He pointed out, “After the 1979 Islamic Revolution, the private sector was not permitted to invest in the insurance industry. It got the permission to participate in the insurance business during the Third Plan after structural reforms were made on the basis of a bylaw ratified by the Sixth Majlis.
Thanks to the private sector, major constructive reforms were made in the industry. Besides the activities of the private sector, important insurance companies are being set up.
One of these entities is Insurance Syndicates, which has been given the license and will soon start work. Likewise, the network of auditors is being set up and its first group will be named the end of next month, ISNA reported.

Insurance Industry and the Fourth Plan
The official also spoke of the important programs for the insurance industry in the fourth development plan (March 2005-2010) citing Article 16 for privatization of state-run insurance companies as one of most important ones. He added, “The State Expediency Council has approved the privatization of business insurance schemes up to 65 percent, which would still need the Supreme Leader’s approval before it is implemented. Necessary actions have been taken with respect to the transparency of state-run insurance companies, re-evaluation of their assets, and preparing them to enter the stock market. Central Insurance of Iran stresses that insurance shares be sold through the stock market.
This is because the shares are sold at real prices to encourage public participation. However, once shares are sold, they will no longer be managed by the government.
As per Article 44 of the Constitution, the government will hold 35 percent of the stakes in insurance companies. In such circumstances it would be in charge of organizing and devising general meetings, articles of association, amount of investment, company insolvency and capital changes. No emergency meeting will take place without taking the government into consideration.“
The official stressed that in the privatization schemes, the goal is to attract wholesale shareholders, and therefore, people and smaller shareholders would be able to buy shares.
The value of shares has not yet been specified, and only after official ratification will their real value be disclosed. Therefore, as decided in earlier meetings, insurance companies will comprise both their net value and the license value. Insurance companies such as Iran, Asia, and Alborz, have had years of experience and have gained public trust.
The best way to evaluate their shares value is to sell part of it in the stock market as per expert evaluation of license.
The determined value should be the basis for future sales. All insurance companies have the potential and necessary preparation to be privatized.
This largely depends on the internal management and government’s decision.
Under the plan all their shares should be sold. Privatization should take place gradually so that the government not to incur any loss. Smaller companies should be privatized first as it is much easier and takes less time.“

Loss Coefficient in Insurance Industry
The official put the percentage of loss insurance coefficient, exclusive of the third party, at 60 percent, and added, “At the moment, third party insurance comprises 36 percent of insurance covers. Loss payment includes 60 percent of all-loss insurances. For that reason, the high rate of loss insurance coefficient for third party insurance decreases profitability. There are many car accidents in the country and because of that insurance claims are high.
Exclusive of third party insurance, the loss coefficient has fallen below 60 percent. However if third party insurance is included, it will go up by 70 percent.
Therefore, private insurances which do not have structural problem of third party insurance are more profitable. The average profit of the industry is 20 percent after taking administrative costs in account.
“This activity is different from others. In the industry, insurance premium is charged first and insurance loss is paid later.
This way profits are obtained and saved and with better practices in investment management, the insurance company can add 10 percent profit to that of the stated five percent.
Two factors play a crucial role in deciding insurance profits. One is third party, which decreases profits and the other investment management and recouping investment within the country. Last year the Tehran Stock Exchange was in good shape.
Therefore, it was natural for insurance companies to invest there. They attained the desirable profits. However this year share prices slumped and this could have a negative impact on the insurance industry,“ he explained.
Hemmati put the profits loss by third party transactions at 700 billion rials in 2004 and said, “Such figure has not been predicted for 2005, but it could be even higher.
However, insurance companies run many other profitable firms and accrue a great amount of capital. A quick look at the last two years of their activities proves that the private sector also made profits.“