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2017 that the government intended to sell off its 14% stake in largest Iranian automaker Iran Khodro and its 17% stake in the second largest, SAIPA. Since then both companies have been severely impacted by the heavy sanctions introduced against Iran by the US last year—foreign partners including PSA Group’s Peugeot and Citroen pulled out of Iran fearing secondary sanctions from Washington should they stay.
Bastani reportedly said: “Earlier last week, the government's economic commission decided to sell all government shares in car companies and some other state-owned corporations.”
Once the stake sales were completed, “the country’s automotive sector will be on the verge of a major transformation”, he added.
The path to full privatisation will take at least a year, but the reported clearance given by the important commission is a significant step forwards.
IKCO and SAIPA have been a drag on the government’s coffers since they were taken into state ownership following the 1979 revolution. A lack of investment and a reliance on foreign partners have left the companies producing cars designed in the 1980s, including the Kia Pride and Peugeot 405.
Bastani added that ministries were also gearing up to sell their stakes in six other companies including major Tehran football teams Persepolis and Esteghlal–the two biggest teams in Iran.
Auto production in Iran plunged 73.3% y/y in the 12 months to February 19, latest data released by Iran Vehicle Manufacturers Association shows.
The collapse in the value of the Iranian rial (IRR) as a consequence of renewed US sanctions has forced much of the car buying Iranian public out of the market. Automakers and parts suppliers, meanwhile, have been hit by a series of shocks including foreign partners leaving the country due to the US action and big increases in the prices of components.
According to the data, van production dropped from 133 units in the Persian month that ended on January 20 to 35 units in the following local calendar month. Production of industrial vehicle maker Iran Khodro Diesel (IKD) fell to no vehicles produced.
Small independent manufacturer Soroush Diesel, an assembler of Hyundai-branded small lorries and vans, saw a 63% reduction y/y, producing 85 units.
9.1.3 Transport sector news
Russian and Iranian officials met in Tehran on May 22 to discuss the formation of a joint railway company as part of the planned International North-South Transport Corridor (INSTC), according to Mehr News Agency.
Those planning the 7,200-kilometre, multimodal INSTC see India connected to northern Europe via a corridor running through Iran, Azerbaijan and Russia with direct sea routes from western India to Iran’s only oceanic port, Chabahar on the Sea of Oman, crucial to the project’s success. Rail routes running from Iran and through Azerbaijan to Moscow would also be fundamental to INSTC. Saeed Rasuli, head of Islamic Republic of Iran Railways (RAI) and Iran’s deputy minister of roads and urban development, met with first vice-president of Russian Railways Alexander Misharin in Tehran.
“Forming a joint railway company with Russia can improve railway transit in both countries,” Rasuli said. “We have the implementation of various railway
38 IRAN Country Report June 2019 www.intellinews.com