We will support new high-tech projects.

Ali Ashraf AFKHAMI Chairman BANK OF INDUSTRY AND MINE

Foundation for finance

January 12, 2018

Ali Ashraf Afkhami, chairman of the Bank of Industry and Mine (BIM), talks to TOGY about about the bank’s role in financing industrial projects in Iran and its major projects, as well as prospects for integration with the international banking system. BIM finances industrial and mining developments in Iran, with recent projects including a package for 6 GW of power generation, the Ilam and Bushehr petrochemical complexes and three South Pars phases.

On January 11, 2018, Italy’s economy ministry announced that BIM had joined with Middle East Bank to partner with Italian state holding Invitalia on a USD 6-billion investment scheme for joint projects in Iran in the infrastructure, construction, oil and gas, electrical energy, chemical, petrochemical and metallurgical industries.

BIM is a state-owned development bank providing finance for industrial and mining projects in the country. The bank’s main objective is to channel finances towards developing Iran’s economy. It assesses and supervises industrial and mining projects, including power and oil and gas projects, as well as renewables initiatives and more. BIM has financed energy projects such as South Pars phases 19, 20 and 21; oilfield developments on the Iraq border; the Kavian Petrochemical Complex; the Mahabad and Lorestan polyethylene plants; the Bid Boland 2 refinery project; the Ilam Petrochemical complex expansion; and the Bushehr Petrochemical mega-project.

• On doors opening: “A year and a half ago was a monumental time for Iran because of the nuclear agreement. We wished to co-operate with foreign banks, but many of them had interests in the US and were reluctant to put themselves at risk from repercussions from the US. However, we have more doors open now and it is starting to get back to normal. We have begun to renew our contracts with different banks. So far, the latest count of international banks working with BIM is 77, most of them from Europe.”

• On Iran’s reintegration with the global banking system: “It will not happen overnight, because we have been absent for so long. Nonetheless, I believe that with very hard work, it may take another year and a half. Right now we have concluded around 65% of what is needed. However, the remaining part is fine-tuning, which takes time.”

Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Ali Ashraf Afkhami below.

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What is BIM’s role in the Iranian economy?
Bank of Industry and Mine is an Iranian institution established in 1956 that aims to increase economic growth through the development of industry and mining. We have a great history of financing different types of projects in Iran in a wide range of industries. Our financing portfolio includes industries such as oil and gas, petrochemicals, pharmaceuticals, textiles, power, manufacturing, steel mills, paper, automotive, high technology and more.
We are very strong in certain sectors, such as power plants. In recent years, BIM has definitely been number one in financing of power plants in Iran with a market share of about 45-50%. Within the past four years, we have concluded a financing package for 6 GW, covering 12 power plants of 500 MW each.
We have recently entered into the expansion of the rail network as well. We have financed the first high-speed train in Iran, which will run at 300 kilometres per hour. The value of the package was USD 1.8 billion and the project is now under construction.
The most recent sectors we have been involved in are the aviation sector with the purchase of eight Airbus ATR aircraft for Iran Air’s new fleet, and port expansions and infrastructure upgrades in Bandar Abbas and Chabahar.

 

What is the importance of the oil and gas industry for Iran?
We see this sector as a very important one because it is an export-oriented industry. They are exporting products, bringing currency to the country with added value, and that will definitely benefit the whole economy of the country. In this sector, we have good relationships with the Ministry of Petroleum, NPC [National Petrochemical Company] and NIOC. In very difficult situations, our role has been crucial for resolving certain challenges that they faced.

Which projects in the oil and gas industry has BIM financed in recent years?
In the upstream sector, we have partly financed South Pars phases 19, 20 and 21 and the development of some oilfields shared with Iraq.
With regard to petrochemicals, we have financed different projects such as the Kavian Petrochemical Complex, the largest ethylene cracker in Iran. It is now in operation and running very successfully. It not only provides ethylene for the downstream, but its excess production is exported to India, China and other countries.
We are also participating in some polyethylene plants such as the one in Mahabad and Lorestan, which were 100% financed jointly by BMI and NDFI [National Development Fund of Iran] and are now in operation as well. Other examples are the expansion of the Ilam Petrochemical complex and Bushehr Petrochemical mega-project, which was partially financed by us.
In the downstream sector, we have approved a financing package for two of the condensate refineries in Asaluyeh and the huge Bid Boland 2 Refinery project.

As a large investment bank in Iran, what is your approach to the international banking system?
A year and a half ago was a monumental time for Iran because of the nuclear agreement. We wished to co-operate with foreign banks, but many of them had interests in the US and were reluctant to put themselves at risk from repercussions from the US.
However, we have more doors open now and it is starting to get back to normal. We have begun to renew our contracts with different banks. So far, the latest count of international banks working with BIM is 77, most of them from Europe.
Another important fact that brings us closer to the international banking system is that we are in compliance with all of the international standards. We are now working on the Basel III [reform framework], which is very important. It’s a demanding task for Iranian banks, and even for European banks, because the deadline to comply is 2019. By implementing Basel III and AML Risk Management, we will show that we are doing our best to work like other international banks. We recognise the international standards such as IFRS, and that is very important for further co-operation.

How long will it take for Iran to finally re-enter the international banking system?
It will not happen overnight, because we have been absent for so long. Nonetheless, I believe that with very hard work, it may take another year and a half. Right now we have concluded around 65% of what is needed. However, the remaining part is fine-tuning, which takes time.

What is the bank’s latest milestone?
Last July 2017, we signed a loan agreement with Exim Bank of China for the high-speed railway development. Its value was USD 1.5 billion. This is the first loan agreement in years [in Iran from a foreign source], followed by a USD 10-billion loan from China’s CITIC Bank International, and a EUR 8-billion loan agreement by the Korean EXIM Bank. We are expecting more European and East Asian banks to enter the market too.

What is your vision for the next three years?
We will expand our services, providing good quality to our customers for the development of the Iranian industry, including the energy sector as one of the core businesses for our bank. We will support new high-tech projects.

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