Petrochemical industries are in danger of being shut down/ why did the gas feed rate become 7000 tomans? – Tejarat News

According to Tejarat News, determining the gas feed rate for petrochemicals is one of the challenges that exists between the government and producers every year. Now pictures are being circulated on social networks, which show that the gas feed rate is going to increase to 7000 Tomans and the price of gas to 4000 Tomans. This issue is not very fair from the point of view of the activists of this sector and may put the petrochemical industry on the path of bankruptcy and closure.

In this letter, which was signed by Mohammad Mokhbar, the first deputy head of government, and addressed to the economic ministries, the feed rate of petrochemicals was set at 7000 Tomans, so that their subsidy would be revised to about 40%.

While the government has decided to raise the price of petrochemical gas feed, the activists of this industry resisted the price change with their extensive lobbying last year. To the extent that, despite the allocation in the government budget bill to modify the rates, the managers of the petrochemical industry managed to remove this item from the 1402 budget during several meetings with the government.

The increase in petrochemical feed rates despite the decrease in global gas prices

Activists of this industry believe that while they may have to buy gas at a higher rate this year, the global price of gas has decreased this year.

But why has the government made such a decision and how was the rate of 7000 Tomans calculated? To find out about this story, it is better to have a look at the sources of the subsidy targeting plan.

As reported by the Majlis Research Center, for every 1000 Tomans that is reduced from the 7000 Tomans feed rate of petrochemicals, these resources will face a deficit of 37 thousand billion Tomans.

Therefore, before examining other reasons, maybe this issue is the necessary and sufficient reason for the 40% increase in the feed rate of this industry.

Another issue is related to fixing the exchange rate at 28,500 Tomans. This rate also faces a deficit of 148 thousand billion tomans for targeting subsidy resources. As a result, the government must either accept this deficit or compensate a part of it by increasing the feed rate of petrochemical gas to 7000 Tomans.

Of course, another solution of the government is to change the exchange rate of the currency exchange center, in which case the price of the dollar in the free market will probably change, and other markets should also expect a new inflationary shock.

However, it seems that the first issue has a more important role in this decision of the government, which, of course, has not yet reached the notification stage. Because considering the rate of 28 thousand and 500 tomans, the feed rate of petrochemical gas should be set at 3900 tomans. To obtain this rate, it is sufficient to obtain the sum of half of the average gas price in four designated hubs, i.e. Alberta, NBP, TTF, and Henry Hub, and half of the average domestic gas price.

According to this formula, if we consider the currency exchange rate set in the budget of 1402, i.e. 37 thousand tomans, the feed rate of petrochemical gas will be about 1610 tomans less than 7000 tomans, i.e. 5390 tomans.

As a result, this type of rate determination will end up at the expense of petrochemicals, and that’s when the related industries will feel the risk of bankruptcy and closure.

In the meantime, the government’s point of view is that this feed reaches the petrochemicals with a 50% discount, and the petrochemical industry swallows a significant subsidy every year. While the government can get a significant foreign exchange profit by exporting the same amount of gas at real prices.

Surveys show that gas is now exported in the range of 35 cents, while petrochemicals still pay the government 18 cents to receive this feed.

But it should also be noted that the statistics of 1401 and previous years show that the petrochemical chain has always played the biggest role in the country’s non-oil foreign exchange. Only during the last year, these industries have earned more than 18 billion dollars, and more than 12 billion dollars of it has been supplied in the Nima system, and the rest has been allocated to production units.

In the meantime, an important criticism of petrochemicals is related to the completion of the production chain. Despite receiving the mentioned subsidy, the activists of this industry have no serious determination to complete the chain, and the supplementary plans have been falling apart for years. Especially since now more than 300 petrochemical products are traded in the world market, but Iran’s product portfolio still remains in the same 37 products.

The technical shock of the stock market and the increase of mistrust

Apart from the risk of bankruptcy and closure of petrochemical industries, the publication of the letter regarding the increase in petrochemical feed rates once again depicted the existence of strange rents and increased mistrust in the capital market. To the extent that some market experts have referred to this possibly secret decision of the government as a “technical blow to the stock market”.

The important point of the published letter is related to the date of its signing by the first deputy of the government, i.e. May 17, 1402. Just on the day when the total stock market index dropped by 95 thousand and 43 points, it registered a historic fall, so that “Black Sunday” will once again be corrected in the glass hall of transliteration.

The bold role of petrochemical, refining and oil symbols and the formation of long sales queues for the shares of these companies show that the whales of this market probably got access to strange rents by knowing about the mentioned letter. An issue that ordinary shareholders have just learned about after 51 days.

Now, if this market does not suffer a technical shock, it is unlikely that it will come out of the shock soon; Because the shareholders are anticipating an almost long-term correction period.

Of course, apart from the stock market, it seems that the negative signals of this government’s decision will spread to other markets, including currency, gold, coins, etc. However, government officials, specifically the Minister of Economy and the head of the Stock Exchange Organization, continue to work as they did in the past without responding to this decision, which may be a big scandal in other countries.

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