Head of the Renewable Energy Association: The private sector is the generator of the economy

One of the biggest challenges for the private sector active in the oil industry in recent decades, which has been discussed many times, is the issue of “financing” oil and gas projects, which has faced activists in this field with countless issues and has made the burden of problems of the private sector heavier.

The debts of past governments to private sector contractors are an important issue that it seems necessary for the new government to pay special attention to. Due to the importance of this issue, we have arranged a conversation with Arash Najafi, Chairman of the Board of Directors of the Iranian Renewable Energy Association, one of the member organizations of the Iranian Knowledge-Based Organizations Forum.

What is the status of the private sector’s demands from the government? What impact has this situation had on the country’s economy and the oil industry?

You see, when the Ministry of Oil does not organize its economic cycle properly and cannot devise a proper financial turnover, gradually the entire economy of the country falls like dominoes one after another and the country’s economy collapses. So what is important in the first place is that we understand the concept of energy economics and have a proper understanding of cost-income. This is while the government has never tried to focus on economic models and has not been willing to use efficient people, especially the real private sector of the country.

In other words, it has not allowed the private sector to participate in government-related programs and projects at all. In other words, the government is continuously weakening the private sector, as you can see now. One of the biggest problems is that 95 percent of the country’s executive and development projects are in the hands of state and private companies, then the private companies hand over these projects to the real private sector. That is, in practice, the real private sector carries out 56 percent of the country’s executive projects, but in a second and third-hand manner; what could be the meaning and significance of this? This means that the one who really understands the economy and should benefit from this economic share, create dynamism in the country and complete the country’s economic cycle, is unfortunately at the end of the line and earns minimal benefits and profits. This same process causes us to not be able to have a truly strengthened private sector in reality, which creates confidence in investments. When the truly private sector does not have confidence in investment, it directs its capital elsewhere, and as a result, we face a shortage of capital and investors in the country.

In a situation where private sector investors see a wave of uncertainty in society and continuously suffer losses, they will definitely not invest in this area anymore, and as a result, we witness the flight of domestic capital and the lack of foreign capital entering the country. As a result, when you do not have anything in the form of capital and investment in the country, the country’s economy gradually becomes barren and you are faced with a barren desert.

The fact that today the government is looking for how to pay the private sector’s bills and not pay its debts to the private sector on time, and as a result, inflation is weakening the financial capacity of the private sector moment by moment and making it smaller and smaller, the private sector will no longer have the power to be present and participate in the country’s economy.

Therefore, what happens is that the private sector gradually does nothing and does not implement any projects, and in the end we are faced with the fact that if the private sector wants to implement a project, it will have to compensate for the costs imposed on it as a result of late payments, and these costs will also increase. Rest assured, this government that is now damaged in this way has several reasons. Because, this lack of real attention to the private sector, uncertainty, and lack of attention to a proper economic approach will cause the first damage to the government.

The existing historical record shows that sanctions have also had an effect on these troubles and problems.

Look, the Iranian Oil Company was once one of the most successful economic companies in the world. Not everything comes down to sanctions. Sanctions are an excuse for those who want to cover up their mismanagement and cannot be held accountable. They blame sanctions for mismanagement. In fact, what has happened to the country’s economy is that we ignored the economic capabilities of the private sector and for this reason we had no economic return, and the costs of the projects spent by the Khusolati complexes have not been profitable at all due to the large amount of bureaucracy and the large amount of operating costs.

Considering the issues we talked about and you rightly said how the situation has developed and what situation we are in now, and considering the current situation, there are two issues that I would like to talk about. One is the issue of the demands that the private sector has on the government and the fact that if a project is handed over to the private sector, then in every detail the private sector will ultimately suffer, and the other is the issue of the private sector being second in command in carrying out projects, which are very important issues. If possible, could you explain more about these topics?

The government should profit from the return on investment and projects. When the contractor is unable to complete the project due to late payment, the work is actually delayed and the work that was supposed to be completed in two years is completed in 10 years.

A contractor who should complete the work for a thousand tomans ends up finishing it for ten thousand tomans. The project that was supposed to make a profit of two thousand tomans makes a profit of two hundred tomans; so this economic cycle is completely incomplete and defective. Because it has caused the contractor to be deprived of even his initial wealth. Furthermore, the price of the projects has become more expensive and the income generation and efficiency of the project have also decreased. That is, when you look at it, you see that this vicious cycle that the government has created, this outsourcing of affairs to state-owned and private companies, the elimination of the private sector and the insistence that affairs be in the hands of the government, has only led to the fact that we have a weaker, more incapable and more inefficient economic body every day.

What is the solution to this problem?

We must strengthen investment funds; we must know that nothing special happens in the stock market. Our stock market is wrong and is more like a gambling house where everyone loses. People who enter the stock market in the hope of profit lose, and a special group of people who have information win because of their control over this information. Ultimately, when a society becomes poor and weak, it cannot pay taxes, and the economic cycle and circulation are also incomplete, and ultimately the entire country becomes poor, weak, and exhausted from this type of management.

So, economic power, prices, and… all indicate the wrong behavior of our governments that have worked hard to continuously weaken and eliminate the private sector. They have defined contracting and the private sector as anti-values ​​instead of knowing that the productive ideal of a country’s economy is the private sector.

We saw the behavior of the 13th government towards the private sector parliament, how unkindly, carelessly and stubbornly they treated the private sector, and even tried to bring the private sector parliament, which is a 140-year-old organization and in fact the first form of social law and parliamentary law, under the supervision of the government and government rules, for irrelevant reasons.

Well, these show that there is no belief in the private sector in the government. So if we are going to remind the government of something, we should remind it to respect the private sector and believe in the ability of the private sector and believe that it was the private sector that built this country. Governments, governments and kings have come and gone. What has preserved the structures of this country and made us have a civilization that is several thousand years old, has happened to be the role of the private sectors, which are the same people, and in fact, the role of the people.

These are the people who made history, but unfortunately, governments are oblivious to understanding this issue and most of the time, with mental deviations and mistakes they make, they cause social and economic chaos in the country. An example of this was the inattention of the tenth government to the Supreme Leader’s orders to reform the consumption pattern, which caused a major mistake and deviation regarding direct payment of subsidies, the consequences of which are rampant inflation and many problems, including energy imbalances and the like. At that time, the then president did not pay any attention to any of our explanations as the private sector.

Now, after fourteen years, we are pregnant with inflation of several hundred percent, we are facing an 18,000 megawatt electricity shortage. We are facing a 270 million cubic meter gas shortage during the cold season. We are facing a shortage of several billion dollars of gasoline in the country, and…. All of this is because the private sector’s proposal was not carefully considered in the tenth government, the eleventh government, the twelfth government, and the thirteenth government.

Publication date: 10/16/1403