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Iranian Insider: Scrutiny Returns to Oil Revenue Use
17 Mar 2009 10:32 AM
Excerpt from Caspian Investor by Kent F. Moors, Ph.D., Contributing Editor 
| On February 17, an Iranian National Audit Office report ignited another round in the political fight over oil sale proceeds. However, for the first time, this one clearly indicates that Ahmadinejad officials have been illegally withholding funds. Issued for the Majlis (parliament), the analysis reveals that the government did not return to the treasury $1.058 billion of surplus oil revenues from the 2006-2007 budget. “This is certain to put the current government under renewed pressure,” an editor at the Tehran Times told us on February 20. “Even some of the president’s main supports are criticizing such actions.” |
The report also stated that there had been no mention in government documents of the $61 million paid in taxes by the National Iranian Oil Co. (NIOC). In a related matter, “The government purchased a large amount of gasoline and gas oil during the current Iranian year [to end March 20] without parliamentary approval,” said Hamid-Reza Katouzian, head of the Majlis Energy Committee, on February 15. He called on the Majlis Presiding Board to conduct a serious probe into the situation. One Majlis contact pointed out another major aspect of the widening scandal in a telephone conversation on February 21. “This borders on a significant legal infraction,” he said. “In all, we [the Majlis] had authorized the government to import $3 billion of gasoline and fuels for the year. In point of fact, however, the figure appears to exceed $5 billion. There is no accounting, no indication of where the funds came from, and little inclination by officials to tell us where the oil products went once they entered the market.” Katouzian quoted Iranian Oil Minister Gholam Hossein Nozari as saying that President Mahmoud Ahmadinejad had ordered the extra purchase. Katouzian then flatly declared, “This occurred despite the fact that the Majlis should approve the government’s income and expenditure. So, the purchase of more than five billion dollars was illegal.” Meanwhile, the secretary of the Majlis Economic Committee, Mohammad-Reza Khabbaz, criticized the government’s breaching of the law and called for adopting appropriate measures to prevent this from happening in the future. In the past three years, Iran has run a surplus of oil revenues resulting, until recently, from the increase in crude prices. According to Iranian law, the government must transfer any additional income from oil sales to the treasury or the foreign hard currency reserves. President Ahmadinejad in January denied media reports that his government had illegally withdrawn funds from the foreign exchange reserves.”No one in the country has the right to spend illegally even one dollar from the reserve,” the president said. “All government spending should be approved by parliament. We cannot withdraw from the reserves whenever we want.” Nozari, who was present at the session, responded to the accusations, saying, “The Oil Ministry is accountable for every cent of oil revenues and our books are clear.” That response is now under significant scrutiny. The issue has been building for some time with critics focusing on the 2006-2007 proceeds now put center stage by the National Audit Office report. Caspian Investor first revealed the absent revenues (Commentary: Where are the Iranian Oil Proceeds?” Caspian Investor, November-December, 2007). At one point (October 21, 2007), a group of Majlis members demanded that the government account for some $120 billion in oil revenue, a request never adequately answered. A rising number of Majlis deputies continue to question the overall budgetary approach of the government, with some now stating they will not support either implementation of the current development plan or main elements of the government budget itself, without a more detailed rationale and explanation. In all of this, the usage of oil revenues looms large. Read Related Articles Caspian Investor provides unequaled news and analysis of energy sector developments in the countries of Central Asia and the Caspian Sea region. Prepared by a seasoned staff of in-country journalists, only CI brings you the details you need to understand how regional developments will impact your business in this dynamic market. To Subscribe>
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