The economic impact of US sanctions against Iran over its nuclear program is unclear as Iran has signed about $20 billion in energy contracts with foreign firms since 2003, said a US audit report.
“US officials and experts report that US sanctions have specific impacts on Iran; however, the extent of such impacts is difficult to determine,“ said the report by the nonpartisan Government Accountability Office (GAO), which was obtained by Reuters on Tuesday prior to its release later this week.
“Other evidence raises questions about the extent of reported economic impacts,“ it added.
The report by the investigative arm of Congress comes at a sensitive time for the Bush administration as it is pushing for a third round of UN Security Council sanctions against Iran for its refusal to give up nuclear work.
Foreign ministers from the permanent members of the UN Security Council as well as Germany are expected to meet in Berlin next Tuesday to iron out differences over new sanctions with most objections coming from Russia and China.
In a written response to the GAO, senior Treasury Department official Stuart Levey claimed Iran was experiencing ’increased economic, financial and political isolation’ because of US and international sanctions.
But since 2003, the Iranian government had signed contracts worth about $20 billion with foreign firms to develop its energy resources, said the report.
It also said strict US sanctions on state-owned Iranian banks could be circumvented if those banks turned to other financial institutions or funded their activities in currencies other than the US dollar.
A US national intelligence estimate last month said Iran had no nuclear weapons program, the GAO said. “Iran’s global trade ties and leading role in energy production make it difficult for the United States to isolate Iran,“ the report said.
Increased oil demand, high oil prices and Iran’s huge reserves, helped Iran get more than $50 billion in oil revenues in 2006, the report said.
From 1987 through 2006, Iran’s exports grew from $8.5 billion to $70 billion, while Iran’s imports grew from $7 billion to $46 billion, it added.
In the past year, Iran has signed a contract worth more than 1.5 billion euros with China’s national petroleum and petrochemical companies to develop up and downstream oil projects and to upgrade an existing field. China’s Sinopec has a 1.3 billion euro deal to upgrade Iran’s Arak refinery and other deals worth over 35 billion euros to develop the Yadavaran gas field and Gamsar oil block.

Recent gas disruptions have forced residents of northern provinces to seek alternative fuel for heating and cooking.

Oil Minister Gholamhossein Nozari said 2.5 percent of the subscribers are without gas at present. “About 300,000 out of 13.2 million subscribers are currently without gas,“ said the minister at the end of a cabinet meeting on Wednesday, promising that the problem would be resolved by ’Saturday and Sunday’.
Unprecedented cold weather led to sharp rise in domestic consumption. This, coupled with halt in Turkmenistan gas exports to the country, left many Iranians in northern provinces without gas for the past two weeks, IRNA reported.
Neighboring Turkmenistan halted daily deliveries of up to 23 million cubic meters to Iran in late December, citing technical reasons, and it has since said Tehran’s failure to meet some payments was delaying pipeline maintenance.
Iran, which has the world’s second largest gas reserves, insists it is up to date with payments. Iranian officials say Ashkhabad wants to charge more for its gas.
Injection of over 475 million cubic meters of gas into domestic transmission network has almost solved most of the problems, he said, adding that some regions are still facing drop in gas pressure.
The minister reiterated his earlier position that negotiations with Turkmenistan would begin only after Ashkhabad restores gas supplies.
“Gas is currently not exported to any region and all gas produced in Iran are consumed at home.“
Asked about storing gas for use in times of shortages, the minister said that two gas fields including Serajeh in the central province of Qom and an unnamed one in Varamin near Tehran has been considered for the purpose.
On gas sale to Bahrain, Nozari stated that the policy is to export gas to Persian Gulf littoral states for eight months of the year excluding the four cold months.

The third mobile phone network, once launched, will increase cell phone subscribers by 15 million.

A senior Communications and Information Technology Ministry official said Iran currently has over 28 million cell phone subscribers.
“Mobile phone penetration rate has grown by 45 percent and country’s two cell phone operators have 28,606,700 subscribers,“ Ahmad Pourangnia said at the one-day International Conference on Investment Opportunities in Iran’s Telecom Sector which opened in Tehran on Wednesday.
The number of mobile phone subscribers will reach 35 million by the end of 2009, Pourangnia, director general of ministry’s International Affairs Office, predicted. The third mobile phone network which is to be launched soon will increase cell phone subscribers by 15 million.
“Launch of a new cell phone operator will boost competitiveness among networks operating in Iran, making them improve services to users,“ the official observed.
Speaking at the same gathering, conference’s secretary, Mehdi Rohaninejad said that tender for the third operator will take place in middle of 2008.
“Those interested have three months to propose their views on tender procedures of the third operator,“ he noted, warning that no changes would be made after approval of its articles of association.
Meanwhile, head of Privatization Organization, Gholamreza Heidari Kord-Zangeneh said that shares of 30 out of 33 companies affiliated to the Telecommunication Company of Iran will be transferred to private sector in line with Article 44 of the Constitution.
“Measures had been taken to pave the ground for privatization of the first cell phone operator and they network is in line for privatization,“ the official stated.

Recent cold weather--unprecedented in the past 50 years--has led to disruptions in gas supplies to cities and villages, especially in northern Iran. This has inflicted huge losses on public, industries, power plants, agricultural and transportation sectors. Iranian officials also had to grapple with another bitter issue which was a halt in Turkmenistan gas exports to Iran last month. Negotiations on resumption of gas flow to Iran have so far not yielded any result. It is said Turkmen side wanted to charge Iran more for its gas. The government took certain measures and called for energy conservation to overcome the current situation.
Now as the snowfalls stopped and the situation is gradually returning to normal and the question that naturally strikes one’s mind is--why Iran, which has the world’s second largest gas reserves, has to go through such crisis? Why should the country even think of exporting gas to Turkey, Pakistan, India, Bahrain, Syria and even Europe when it needs the energy domestically?
I. Iran began using gas as a fuel in homes and industries less than two decades ago. Following the Iran-Iraq war (1980-1988), volume of investments in oil and gas sectors grew. Few years later, gas replaced other oil derivates including kerosene and diesel in households and industrial units. Since then, the priority was given to developing gas networks in quantity rather than quality.
II. Since gas is cheap and the public is not informed on the value of this precious source of energy, gas wastage is high in this country. The fact is that Iranians consume fossil fuels excessively since they do not pay high prices for them. This can become a challenge for the country in the future.
III. Other issue ignored by the Iranian government is that it has mistakenly trusted its neighbor Turkmenistan. The recent move by Ashkhabad as the country facing freezing cold winter shows that Iran should not count on its northern neighbor. It should make plans at home to meet domestic demand from its own energy reserves to prevent Turkmenistan from stabbing it in the back again.
IV. The other matter is that although Iran is a hydrocarbon-rich country, it should invest in acquiring new energies including nuclear power.
V. Also, Iran’s oil and gas industries are in dire need of investment. The recent crisis should prompt officials to spare no efforts to attract investment from home and abroad in the sector. In the past two years, the Ahmadinejad administration has endeavored to capitalize on capabilities of Iranian companies, experts and contractors and do away with its dependency on foreign energy firms. On this front, the government has a bumpy road ahead. Delays by two European giants, Shell and Total in investing in South Pars gas development projects, shows that Iran’s oil industry should find new ways to inject new money in its oil and gas industries.
VI. And why gas exports? Some domestic experts maintain that Iran should limit or even stop gas exports. They believe the country should use all its natural gas at home and export just oil and its derivates. But the reality is other thing. Gas will become the main source of global energy in the coming decades. The dispute between Ukraine and Russia in the past two years proves this. Since Iran holds the world’s second gas reserves, it cannot deprive itself from this global tug of war over gas. Iran should become an active player in future developments of international gas market.
VII. It seems the recent crisis gave good lessons to country’s officials. They should take firm steps to attract more investment, improve energy efficiency and develop new energies to become a major player in the global energy policymaking.

Islamic Republic of Iran Shipping Line (IRISL) is the main administrator of the national marine transportation sector, observed the company’s managing director, Mohammad Hossein Dajmar.
He noted that IRISL, established 40 years ago, has 115 vessels with the total cargo capacity of 3.7 million tons, IRIB said.
The official noted that 55 ships will be added to the IRISL fleet, three of which are being built in domestic shipyards and the rest will be purchased from South Korea and China.
Dajmar stated that a decision has been made to cede about 24 percent of the IRISL’s shares to the public in the form of justice shares, adding three percent of its shares will also be put on sale in the Stock Exchange Market for price evaluation.
Criticizing the prolonged process of ship construction in Iran, he noted that one of three vessels was due to be delivered to IRISL last year but ISACO Company announced that delivery would take another six months.
He said that the vessel, named Iran Arak, is the first domestically-constructed ocean liner.
Based on the initial schedule, ISACO was committed to hand over five vessels to IRISL by February 2005, he said, adding that the company however failed to meet its commitments.
“ISACO wanted to increase the price of each vessel by $12 million, so we were forced to give up the idea of buying two of them,“ he said.
He noted that IRISL is in talks with a number of domestic companies to meet its needs.
Dajmar noted that Valfajr Shipping Company also did not meet its commitments to IRISL on building two vessels.
Referring to an increase in the number of shipping routes, he said that launching shipping services between Asia and Europe with the capacity of carrying 6,500 containers on each trip would help IRISL score a major success in the year to March 2008.

Turkey’s leading mobile phone network Turkcell has filed an arbitration lawsuit against the government over difficulties it experienced in launching a new network in Iran.
According to a statement released to the Istanbul Stock Exchange, Turkcell said it had incurred significant losses on investments after Iran granted a license to a consortium led by Turkcell in February 2004 to operate a GSM network in the country, cellular-news.com reported.
Turkcell, which owns some shares of Irancell, claims the government of Iran allegedly blocked its acquisition of its stake in the Iranian mobile operator. The Turkish network originally signed an operator license with the Iranian government in 2004. Turkcell claims it had been seeking a majority stake in Irancell but the government pushed through legislation in April 2005 to limit its stake to 49 percent.
The cellco alleges it then faced a number of other blocking tactics and it was left with little choice but to walk away from the deal.
The Iranian parliament suspected that the company had links with Israel--and after a year of battles, the license was reissued--this time to South Africa’s MTN Group. MTN took a minority 49 percent stake, while 51 percent was allocated to the Iran Electronic Development Company (IEDC).
Iran has two main networks, the incumbent state operator, Telecommunication Company of Iran--which the Mobile World estimates ended last September with some 19.5 million customers, and 81 percent of the market. Irancell, second in Iran’s mobile market, ended the month with a respectable 3.7 million customers. There are also a few small regional operators with negligible subscriber bases.

Over 33 million tons of cement was produced since March.

Cement output will reach 50.5 million tons per year with the completion of six cement projects by March 2008, said director general for mineral industries at the Ministry of Industries and Mines.
Mohammad Reza Mesforoush elaborated that the country is 14 percent ahead of target cement production for the year to March 2008, IRIB wrote.
He pointed out that that since March 2007, some 33.4 million tons of cement were produced compared to 35.3 million tons and 41.2 million tons for the years to March 2006 and 2007 respectively.
The official disclosed that Ardestan cement factory in Isfahan province was inaugurated few days ago and hoped that it would start production in coming weeks adding one million tons to the domestic production capacity.
Pointing to the cement projects underway in Bushehr, the North (of Iran), Shahr-e Kord (Chaharmahal-Bakhtiari province), Ardestan and Sabzevar (Khorasan Razavi province), he expressed confidence that output would reach 55 million tons/year in May and pass 65 million tons/year by March 2009.
If the trend continues, cement output will exceed 75 million tons in 2011, he underlined.
Given that Persian Gulf states are interested in Iranian cement, he called for developing transportation infrastructures in an effort to facilitate the exports to target markets.
He put the cost of constructing a cement factory with the capacity of one million tons/year at 1.3 trillion rials.
Presently, about 80 percent of the cement factory is constructed by domestic experts, while foreigners build the remaining 20 percent costing around 15-23 million euros, he elaborated.
In related news, deputy commerce minister for domestic trade affairs said that over 86 percent of the domestic cement output were allocated to the non-governmental sector since last August.
Mohammad-Sadeq Mofatteh explained that about 74 percent of the cement has been earmarked for private construction projects, over 12 percent for cement-based industries and 12 percent for development projects during the period.
He described the rise in cement consumption as one of the development indices, underlining that consumption reached 22 percent during March-September 2007. The official attributed the rise in cement consumption to the Cabinet’s provincial visits and the growing number of development projects. Per capita cement consumption, he noted has reached 600 kilograms.
Stressing that construction operation with Portland cement is more economical than steel, he said that the number of construction permits issued during March-September 2007 was higher than those issued during March 2006-March 2007.