The government has earmarked 20 trillion rials for projects in the water sector over the next 10 months.

TEHRAN, July 23--Energy Minister Habibollah Bitaraf said here on Saturday that the constitutional supervisory body has rejected plans for withdrawing money from the Foreign Exchange Reserve Fund to finance water supply projects in rural areas, stressing that only 340 billion rials (almost $40 million) has been earmarked for the purpose.
The minister told ILNA that some 62 percent of the country’s rural population had fresh water provided by the national water supply network last year, stressing that the ministry has conducted expert studies on various projects to increase their share.
“The ministry lacks funds for implementing such projects,“ he said, adding that there are plans to boost the rural population’s access to fresh water from the current 62 to 88 percent.
Iran is a semiarid country, where fresh water supply has always been a major concern especially for people living in central regions of the country.
However, Iran is the leading developing country in the dam building industry, according to the International Commission on Large Dams (ICOLD).
The Iranian government has earmarked 20 trillion rials for projects in the water sector over the next 10 months.
This is the first time that the government had allocated such huge funds for the sector.
Some eight major dams will become operational within the next few months using the same funds.
Experts say Iran is the world’s third largest dam-building nation. Iran’s dam-building industry has improved remarkably in the past two decades.

TEHRAN, July 23--First Vice President Mohammad Reza Aref inaugurated the first phase of the giant Darkhoin oilfield development project in southern Iran in a ceremony on Saturday.
According to ISNA, Oil Minister Bijan Namdar Zanganeh and a number of other senior officials of the ministry attended the ceremony.
Italy’s Eni implemented the project in joint venture with Iran’s Nikoo oil firm under a buyback deal. The foreign party financed the project.
Darkhoin development project will be completed in 65 months. The second phase will become operational by late 2006, when the field’s crude oil production capacity will reach 160,000 barrels per day (bpd).
Based on the agreement, the foreign investor will recoup the principal capital in 60 months from the date of production while the interest will be recovered over 72 months.
With the implementation of the first phase of Darkhoin development project, some 50,000 bpd was added to the country’s oil production capacity.
The oilfield began production in July 2004 with 25,000 bpd.
In another development, Iran Offshore Company’s operation manager, Abbas Vakil, told Fars news agency on Saturday that the Doroud oilfield will soon become fully operational. He underlined that the field’s production will increase by 80,000 bpd to reach 210,000 bpd within the next two months.
The official blamed the French giant Total for the delay in implementing the project.
Earlier, the head of a major oil and gas company said the law on maximum utilization of domestic capacities in implementing national projects has been successfully implemented in the energy sector.
Ali Akbar Torkan, managing director of PetroPars, said Iranian contractors have 51 percent stakes in joint ventures with major international firms, including Statoil of Norway, Eni of Italy and Toyo of Japan, in projects to develop the giant South Pars gas field.
But experts say foreign parties involved in joint ventures seek to complete the job with the least possible hassles and within the scheduled time, which does not go with the financial and technical challenges facing their Iranian partners.
US sanctions have led to poor participation of foreign companies in oil and gas projects in Iran, where domestic firms have worked hard to boost their capabilities over the years to fill in the gap.

Saffron bulbs have been smuggled to Afghanistan, where the spice is also produced, making the situation even more difficult for Iran.

MASHHAD, Khorasan Razavi, July 23--Clandestine packaging and low-quality saffron exports in the form of luggage trade have been detrimental to the international status of Persian saffron, said a top industry official here on Saturday.
Ali Shariati-Moqaddam, who heads the Khorasan Saffron Exporters Association, told ISNA that the heavy dependence of saffron business on Spain and United Arab Emirates (UAE) as well as the emergence of new regional rivals such as Afghanistan and China have added to the challenges facing the lucrative industry in Iran.
He further noted that the major regional markets for Iranian saffron, including India and Pakistan, import low-quality saffron because of the high tariffs.
“Afghanistan will soon begin exporting saffron to regional countries at the lowest costs,“ he said, adding that the Iranian saffron industry is now at its most sensitive juncture.
The official added that the saffron industry has created jobs for half a million people in the northeastern Khorasan region, stressing the need to seize the opportunities to keep the industry alive.
He called for the international sales of Persian saffron under a unified trademark as well as greater cooperation between Saffron Exporters Association and relevant state organizations.
Spain processes and re-exports some 40-50 percent of Iran’s total saffron production.
The European country produces only 1-2 tons of saffron per annum, while Iran’s saffron output stands at 120-140 tons a year.
Experts have repeatedly warned that Iran is losing its high status in the world saffron market.
Saffron bulbs have been smuggled to Afghanistan, where the spice is also produced, making the situation even more difficult for Iran.
Some 172 tons of saffron worth $94.9 million was exported during March 2004-2005.
Saffron exports in the year to March 2005 showed a 42.6-percent increase in value and 24 percent rise in volume against figures for the corresponding period the previous year.
United Arab Emirates (UAE) was the largest customer with a total purchase of 78.8 tons of saffron worth $41.5 million. Spain was the second largest with 56.4 tons worth $31 million.

TEHRAN, July 23--A senior Ministry of Industries and Mines official here on Saturday criticized the government for selling petrochemical products at low prices, citing that domestically-made polyethylene is offered at 40 percent below the international prices.
Hossein Abouei-Mehrizi, the ministry’s director general for non-metal industries, told ISNA that petrochemical units sold their products at a total of 4.8 trillion rials below international prices in the year to March 2005.
“With this amount, the industry could have constructed a 700,000-ton petrochemical unit,“ he said, adding that low prices have led to an increase in rent-seeking activities in the industry.
Abouei-Mehrizi said that polyethylene production exceeded 448,000 tons last year, when state-run petrochemical units produced 336,900 tons while the contribution of private companies to the total production was 111,200 tons.
The official said only 23,900 tons of total petrochemical output was exported during March 2004-2005.
A senior petrochemical industry official said earlier the difference between market prices of petrochemicals and their international prices has caused huge financial corruption and rent-seeking activities.
Mohammad Ehtiati, managing director of the Petrochemical Commercial Company, said domestic petrochemical prices have to be regulated in accordance with international prices of the products, stressing that as long as petrochemical prices remain under state control, the market will continue to suffer from instability.
Oil Minister Bijan Namdar-Zanganeh also said earlier that corruption and rent-seeking activities have been on the rise in the petrochemical market, adding that fixed prices and market instabilities are to blame for this.
Iran will climb to the 35th spot on the world petrochemical rankings by March 2006 following plans to commission 15 refineries in the hydrocarbon-rich region of Asalouyeh in the coming months.

TEHRAN, July 23--Eight-percent growth in investment, huge increase in non-oil exports and implementation of five phases of the giant South Pars gas field development project were some of the Khatami administration’s great economic achievements, observed a senior economic official here on Saturday stressing that the per capita income has also improved remarkably since 1997.
Mohsen Safaei-Farahani, deputy minister of economic affairs and finance, told ISNA that the per capita income of Iranian people increased from $1,200 a year in 1997, when the moderate president took office, to the current level of $2,000.
“The inflation rate also came down from 25 percent to an average of 15 percent,“ he said, adding that there are some people who are trying to depict the Khatami administration’s performance as unsuccessful through their propaganda machine.
The official said the economic reform policy pursued by President Khatami produced the desired results.
“The gross domestic product has jumped by 60 percent in recent years, when $2.5 billion of the government’s debts have been repaid each year,“ he said, adding that the Khatami administration failed to publicize its successful economic performance due to the fact that the propaganda machine was controlled by rival groups.
The Khatami administration scored its most brilliant success in the economic sector despite the fact that it came to power on a pledge to create a civil society at the top of its high-profile mandate. Experts say statistics speak of the pro-reform government’s successful economic performance.
The May 1997 election of Mohammad Khatami as the fifth president of the republic was seen by many domestic and international observers as a step forward in efforts to promote social and political freedoms. But Khatami performed more successfully on the economic front thanks to his economic reform policy, which gave top priority to privatization and international interaction.
Khatami established the Ministry of Welfare and Social Security in the final year of his second and last term as president to create better living conditions for the population.

Some carmakers are importing parts, which has made things more difficult for the domestic part manufacturing industry.

TEHRAN, July 23--Car imports will create serious problems for the national automotive industry, said an auto part industry official here on Saturday, stressing that imports have grown with the hike in oil prices.
Sasan Qorbani, a member of the Board of Directors of the Association of Auto Part Manufacturers, told Moj news agency that economic officials have given in to car imports under pressure from certain people who will take interest in the business.
“Our (economic) officials have failed to resist (calls for car imports),“ he said, adding that Iranian auto part makers have managed to improve the quality of their products to a great extent.
He further noted that the national auto part manufacturing industry manufactures some 95 percent of the components for Peugeot 405 and Samand, 60 percent of the parts for Peugeot 206 and 100 percent of the Pride and the phased-out Peykan.
“Unfortunately, some carmakers are importing auto parts, which has made things even more difficult for auto part manufacturing industry,“ he said, adding that importing both cars and car parts has a strong impact on auto part manufacturers.
Slamming car imports as ’harmful’, Qorbani said that national industries will be weakened further with the import of industrial products.
“I do not know those responsible for such decisions, which only harm national interests,“ he said.
Imports will get a new lease on life in the process of World Trade Organization (WTO) accession. This is while the prospect of Iran’s membership in the WTO has already sounded a note of alarm for the automotive industry.
Mohammad Reza Najafi-Manesh, secretary of the Association of Auto Part Manufacturers, said earlier that some 70 percent of national auto part industry might survive WTO accession.

LONDON, July 23--Royal Dutch Shell PLC disclosed in a filing this week that it faces risks of US sanctions in Iran, according to Business Week online.
In a filing with the US Securities and Exchange Commission (SEC) related to the merging of its British and Dutch halves Wednesday, the oil major said its investments in Iran and Syria could mean it will be barred from financing by US institutions.
The SEC has written to European and US oil companies involved in embargoed countries, asking them to inform investors about the risks they face from investing in countries the United States accuses of supporting terrorism.
The sanctions are widely known, but the fact Shell disclosed their possible impact means the risk should be taken seriously, said Manouchehr Takin, a London-based analyst with the Center for Global Energy Studies.
Shell says the US legislation is in conflict with European law, which specifies no limit should be put on investment in Iran. Shell says the enforceability of US sanctions on Shell’s Iran projects appears to be unlikely.
In fact, the US government has formally waived the sanctions for an Iranian natural gas project managed by Total SA of France, OAO Gazprom of Russia and Petronas of Malaysia. It has since turned a blind eye to other investments by Shell and Eni SpA of Italy.
However, the disclosure comes amid a background of political pressure that could lead Shell ’to be more careful’ with its Iranian investments, Takin said.
Scrutiny from the SEC on European companies’ activities in Iran could increase if Rep. Christopher Cox, (R-Calif.), nominated by President Bush to head the regulator, is appointed. Cox, whose appointment could come after a Senate hearing next week, has supported stronger enforcement of US sanctions against Iran.