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Iran Petchem Industry Eyes Credit-Based Solutions for Sustainable Growth

Iran Petchem Industry Eyes Credit-Based Solutions for Sustainable Growth
(Tuesday, December 10, 2024) 10:44

TEHRAN (NIPNA) - Hassan Abbaszadeh, Deputy Petroleum Minister and CEO of Iran's National Petrochemical Company (NPC), highlighted the strategic importance of credit-based supply models in accelerating the growth of downstream industries during the inaugural Supply Chain Finance (SCF) educational event held on Monday.

The event, organized by Bank Tejarat and hosted by NPC, emphasized the role of financial facilitation in strengthening Iran's petrochemical sector, a critical component of the nation's oil and gas industry.

“The petrochemical industry thrives when its final products serve domestic needs,” Abbaszadeh stated, noting the historical focus on exporting key materials like polyethylene, polystyrene, methanol, and urea. "Seventy percent of these outputs are currently exported, leaving local downstream industries underutilized. Expanding these industries is essential to complete the value chain."

Abbaszadeh estimated that downstream industries could support approximately one million jobs, yet production units often operate at just 50-60% capacity due to financial constraints. He attributed this underperformance to liquidity challenges that hinder companies from purchasing sufficient raw materials.

To address these issues, NPC partnered with Bank Tejarat, leveraging credit-based product offerings to stimulate activity in downstream operations. “Last year, 780 trillion rials ($18 billion) in credit-based supplies were facilitated, benefiting the entire petrochemical ecosystem. A vibrant downstream sector ensures a dynamic, stable market,” he said.

From the start of the year to late October, credit-based offerings have reached 720 trillion rials ($16.5 billion), reflecting a 76% year-on-year growth. Abbaszadeh projected the total would exceed 900 trillion rials ($20.7 billion) by year-end.

The supply of petrochemical products to domestic producers not only stabilizes the industry but also creates a robust local market while ensuring surplus production can be exported. Abbaszadeh praised Bank Tejarat’s SCF model and advocated for its broader application across other industries, expressing optimism for its role in securing a sustainable future for Iran’s petrochemical sector.

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