The 30,000 billion tomans unprofitability of converting gas to methanol/petrochemicals is the cause of the government’s budget deficit

Referring to the lack of proper development of the country’s petrochemical industry, Mehdi Hashemzadeh said in an interview with the economic reporter of Fars News Agency: “Unfortunately, due to the granting of cheap feed rents, the development of the country’s petrochemical industry has been very disastrous and unbalanced, and with the continuation of granting feed rents, We are witnessing serious disinterest in the country; This is especially evident after the increase in gas prices in various gas hubs.

He stated: “The problem we have in the petrochemical industry is the lack of proper development of the industry. In 2019, the share of propylene as the caviar of petrochemical products in the world’s petrochemical portfolio was 12%, but in Iran it was only 2%, and in the world, methanol was 17% in the portfolio. Petrochemical products have a share, but in Iran this share has reached 35%.

* The government’s 30 thousand billion tomans loss from converting gas to methanol

The director of the energy group of policy think tank Mahed added: Therefore, the main solution is to correct the current and real trend and float the price of petrochemical feedstock. Converting gas to methanol in the first nine months of 2022 has generated as much as 2.2 billion dollars in foreign exchange, while if the same amount of granted feed had been exported, it would have generated as much as 2.77 billion dollars in foreign exchange earnings for the country.

He said: Another very important point is the money that goes into the pockets of the government and Bait-al-Mal. In the sub-optimal case of converting gas to methanol, 1.5 billion dollars will be paid to the government, which indicates the feed rent granted, but in the ideal case for the country and the people, 2.77 billion dollars will be the share of the government and the treasury, which is a rent of 30 thousand billion tomans. which is out of the government’s pocket and has turned into a budget deficit

He continued: Iran imports 200 to 300 million dollars of products from Korea and Taiwan a year, in two countries that do not have even a drop of oil, but we have not yet been able to complete the value chain and produce these products domestically. Currently, we should be able to change the taste of the petrochemical industry by changing the feed and developing petrochemical refineries.

Hashemzadeh said: One of the solutions is to gradually increase the gas feed of petrochemicals. This year, if the fuel price of major industries and petrochemicals reaches 60-70% of the feed price, it will be good. The main strategy should be to reduce the performance tax and instead eliminate energy subsidies. In this way, we will go towards economic advantage and productivity in feed and fuel consumption will be seriously pursued.

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