Iraqi, Turkish Interest in Iran's Gas Station Market

"Preliminary negotiations have been held with private enterprises from Iraq and Turkey, and they are ready to transfer the much-need technical know-how to Iran to install advanced equipment in gas stations," Ali Maneshi was quoted as saying by Mehr News Agency on Thursday. Iran's state-run gas station and fuel market, which has been closed to foreign companies, "has a great potential for attracting investors", Maneshi said, adding that holding regular international conventions can help the country introduce the unique opportunity to those who are interested in investing in the lucrative business.

Pointing to the first international conference on gas stations and related industries to be held in Tehran between December 24 and 27, Maneshi said, "Trade delegations and companies from Japan, Russia, Italy, Iraq and Turkey have expressed readiness to attend the meeting to display their cutting-edge gas stations' spare parts and equipment."

According to the official, the gathering is aimed at connecting gas stations' related industries as well as paving the way for domestic and foreign financers to play a more active role in the profitable venture. Reportedly, there are 3,600 gas and diesel stations as well as 2,400 CNG stations in Iran, most of which are old and need to be renovated.

  Privatization Underway

According to Mansour Riahi, managing director of the National Iranian Oil Products Distribution Company, plans to overhaul Iran's retail fuel market have already gotten underway with the privatization of more than 250 gas stations nationwide since last year.

"Iran Privatization Organization auctioned 41 state-owned filling stations across 14 provinces last month," he added.

Riahi noted that filling stations in Ardabil, Isfahan, Alborz, West Azarbaijan, Bushehr, Khuzestan, Fars, Lorestan and Mazandaran, among others, were auctioned to private bidders in line with the government’s plan to gradually reduce its monopoly on supply and distribution of gasoline and other fuels.

November's auctions followed up on three major rounds of auctions for state-run gas and compressed natural gas stations nationwide organized by IPO over the last year.

According to reports, 60 gas stations in 13 provinces were put up for auction in February. Auctions for 40 gas stations in 15 provinces, including Markazi, West Azarbaijan, Fars and Tehran, in December last year reportedly generated at least $70 million.

In September 2016, auctions for 100 gas stations in 25 provinces drew 333 bids with a total value of $112 million. The auction process marked one of the largest privatization bids in the country.

"Privatization of gas stations will help NIOPDC, a subsidiary of the Oil Ministry, to gradually scale down its operational role and instead shift to supervisory position in the distribution of gasoline and other fuel products." Riahi said.

NIOPDC is the main body responsible for the supply of gasoline and other fuels.

It says the privatization of gas stations is aimed at improving the quality of services and customers' welfare, although some questions remain.

The ministry is planning to rank gas station brands. The directive specifies that all private brands shall receive gasoline and CNG from NIORDC's storage units, meaning they would basically offer similar fuel, regardless of their facilities and services.