The information published so far shows that the executive basis of the economic opening plan goes through the sale of oil inside.
Apparently, according to the original plan, oil was to be sold in the form of standard parallel futures of crude oil; But now the second route is to be opened through the establishment of tradable commodity funds, called ETC. According to the government’s plan to finance 200,000 billion tomans, it seems that if this plan is finalized, the largest ETC in the history of Iran’s capital market will be based on oil.
It is rumored that the original plan did not provide for the possibility of selling the Commodity Fund units before maturity, which apparently was opposed by some senior executives and it was decided to change the form of work and issues such as the possibility of trading in the secondary market. To be seen in it. Expert meetings between the government and the parliament continued until late at night to address the details of this transparent financing method and the concerns of the parliament.
The supply of crude oil-based bonds to the people was discussed and approved at the last meeting of the Supreme Economic Coordination Council, which means creating new capacity to finance the public sector. The details are not yet known, but conversations with experts in the field indicate the use of new financial instruments to attract the expert opinion of the parliament and the stock exchange.
*** Was the scenario of “selling oil to the people” completed?
Expert discussions in this regard have not been completed yet and expert discussions have not been summarized. Hojjatoleslam Hassan Rouhani on Tuesday, on the sidelines of the one hundred and fifty-eighth meeting of the government’s economic coordination headquarters, referring to the plan to sell oil internally and supply it on the energy exchange, called it a plan based on a people-centered economy and an effective measure to organize He considered the capital market and stock exchange as an important step to counter the enemies’ oil embargo, and considering the approval of the plan in general at the meeting of the Supreme Economic Coordination Council on Monday, expressed hope that after final approval and formulation of implementation, the government could implement this action.
Slowly This statement can be considered as the most important infrastructure for the implementation of the plan to sell crude oil in cash to the people, which has the potential to improve the country’s economic situation.
Also, Mohammad Reza Poorabrahimi, Chairman of the Economic Commission of the Majles, in an interview with the Radio and Television Agency about the content of the meeting of the heads of forces and what decisions were finally made, said: Is. Given that in recent years the issue of supply of crude oil in the energy exchange has been raised, today the issue of derivatives or in other words futures contracts related to the oil field can be effective in the face of sanctions and our export capacity, along with liquidity management. In the community and provide financial resources for the government in various sectors can also provide, was on the agenda. This issue has been discussed and analyzed in various meetings since last week.
*** Suggested advantages of selling oil
Due to the importance and necessity of this issue in the economic environment of the country, the general issues related to it were agreed and it was suggested that the government should use the capacity of the tools related to the future oil contract or in other words oil sales that define its future commitments. It can be used, and for this reason, the cash oil market in the country can have a new capacity, and can increase exports, and improve the country’s trade balance. All these items are as proposed advantages that are on the agenda of the Supreme Economic Coordination Council.
After much discussion and summaries, in order to be able to take advantage of this economic capacity, the generalities were agreed so that we could examine its details in detail in the future. In response to the question whether the sale of oil to the people is certain. And whether it may create debts in the future, he said; The important thing is not to postpone the current government’s commitments to the future government by using derivatives. This issue has been one of the serious concerns of the parliament and other pillars. This was discussed in detail at the beginning of this week. The government’s proposal was slightly inconsistent with the plan that parliament intended to pass and was also approved by the judiciary.
*** Parliamentary opposition
Finally, the sale of oil in connection with this issue is definite. Therefore, a settlement that can include Rial obligations for the future government will not happen at all, and the parliament has officially stated its opposition in this regard at the session. In our opinion, helping to set up an energy exchange in the field of oil and gas condensate supply, whose cash approach is currently slow, is our first priority, and naturally future contracts related to the sale of oil and gas condensate are definitely our discussion, so the basis for rial settlement In our view, it can be ruled out that it was possible to create a commitment for the future government.
*** Parallel standard futures
The style of this offer is very similar to parallel standard futures. There is experience of offering parallel standard futures on the energy exchange, and the first supply of standard light crude oil was in 1994, and the last one was recorded on Monday of this week. There is good experience in this regard, which makes sense to implement. The last issue in the framework of these bonds was 2,500 billion tomans, although in recent speculations this figure is estimated at 190 to 200 thousand billion tomans.
The parallel standard inductor has always been marketed so far, but this time the situation is different Because the number is so high that it covers most financing companies, it is not an easy task to implement quickly. It is rumored that some prominent members of parliament have opposed the proposal, even as the government’s spending becomes a commitment to the next government.
Of course, the approval of this plan, which was announced by the President, means that the objections are limited to expert and operational opinions and can be corrected over time. However, in an interview with an informed source, it was stated that the government’s goal in this plan has not been achieved. However, not transferring the commitment to the next government means that these bonds cannot be for two years, so the maximum must be due in the next year. Also, in the case of marketing, there is a need for the presence of many financing companies, which include the possibility of marketing and buying securities before maturity, which requires very extensive coordination, which studies do not indicate.
*** The possibility of forming commodity funds
The accumulation of crude oil in the current plan, which is close to 600,000 barrels per day, is something like a commodity fund that can start this financial instrument without having inventories in the framework of commodity deposit certificates. For example, oil in pipelines or refineries or in warehouses has a complex mechanism for storage, and it is almost impossible to store it in conditions similar to the certificates of deposit of other goods.
More precisely, there is no need for definitive crude oil reserves, so in any case, a commodity fund or commodity deposit certificate can be defined for oil. In this situation, a commodity fund can be easily introduced with a maturity of two years, and banks or financing companies can participate in these funds. This approach, however, is not much different for the investor in terms of the market maker, but its operating style is very different.
*** Details are not final
Amir Hossein Tebyanian, the representative of the National Iranian Oil Company in the Energy Exchange, said in an interview with the reporter: کرد. We hope that it will be finalized soon with repeated follow-ups and meetings. He was unaware of the details of the proposal and said: “Continuous meetings have been held in this regard and expert steps are being taken and information will be provided in the coming days.”
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