TEHRAN: Iran plans to issue bonds worth up to five billion euros ($7bn) from March to help finance development of its key energy industry, the semi-official Mehr news agency reported yesterday.
"Based on next year's budget bill, which has been presented by President Mahmoud Ahmadinejad, the government permits the oil ministry to issue up to 5bn euro bonds to help finance development of the country's oil, gas and petrochemical sectors," the agency said.
It said the bonds would be issued during the next Iranian year, starting on March 21.
Iranian officials have previously announced plans to issue such bonds, but did not give a date.
In September last year a senior official at Iran's Pars Oil and Gas Company said a 1bn euro ($1.4bn) bond was planned for the development of the South Pars natural gasfield.
Ahmadinejad yesterday said the national budget for 2010-11 would lessen reliance on oil revenues, a move aimed at making Iran less vulnerable to any Western sanctions.
A senior official said budget for the next Iranian year was based on an oil price of $60 per barrel, much higher than last year's $37.5 per barrel.
"The budget is based on around $60 per barrel," said Rahim Membini, the president's deputy in charge of Iran's budget affairs, said.
Ahmadinejad said the new budget was "transparent, integrated and flexible", but did not offer any overall figures.
The news agency said the allocated budget for the next Iranian year was $368bn.
Oil prices fell to four-week lows on Friday, with US crude settling at $74.54 per barrel and ICE Brent crude at $72.83. Prices are at roughly half the peak seen in July 2008 but double the level oil had sunk to by the end of that year.
About 80pc of Iran's foreign revenue comes from oil exports.
The $368bn budget, nearly 24pc bigger than last year's, comes as the government is preparing to enact a law in April that would sharply slash energy and food subsidies.
The law would gradually cut energy subsidies over a period of five years, bringing the heavily discounted fuel prices more in line with international prices.
Addressing an open session of parliament, Ahmadinejad claimed that cutting subsidies would help the government contain inflation, bringing it down to 5pc within two-and-half years.
While experts say inflation remains at about 25pc, the government contends that it is around between 13 and 15pc.
Officials say the step is needed to recoup some of the roughly $100bn spent yearly on subsidies, which currently consume about 30pc of the government budget at a time when high spending and last year's collapse of oil prices have hammered Iran's economy.
Of the estimated $100bn forecast to be saved, the government pledges to spend half on cash payments to families it considers vulnerable. That money would be given to families over a five-year period.
Another $30bn would be earmarked for industries and economic infrastructure projects, and the remaining $20bn will be placed in the treasury to finance future projects.