Reuters: Iran's largest refinery will start issuing bonds on Sunday worth a total of 2.5 trillion rials (about $250 million) to help finance expansion of gasoline production, state broadcaster IRIB reported on Saturday. TEHRAN, Nov 21 (Reuters) – Iran's largest refinery will start issuing bonds on Sunday worth a total of 2.5 trillion rials (about $250 million) to help finance expansion of gasoline production, state broadcaster IRIB reported on Saturday.
Iran is the world's fifth-largest crude exporter but lacks sufficient refining capacity to meet its gasoline needs, leaving it potentially vulnerable to any Western sanctions targeting such trade. Iran is under U.S. and U.N. sanctions over its disputed nuclear programme.
Iran's Bank Tejarat will sell the bonds issued by state-owned Abadan refinery, IRIB said, making clear they would be rial-denominated debt paper.
The four-year bonds would pay an annual interest of 15.5 percent, IRIB said, citing the managing director of the company advising Abadan on the issue, Amin Capital Procurement Company. Abadan is located in the country's south-west by the Gulf.
Amin managing director Mohammad Aran also said the aim was to raise Abadan's gasoline output by six million litres per day, without giving details or comparisons.
Iran has earlier announced plans to issue bonds to help fund development of its all-important energy sector, including of the South Pars natural gas field in the Gulf.
Last Tuesday, it said it temporarily boosted gasoline output by about 30 percent to 58.5 million litres per day to show the West it can cope with any sanctions targeting its fuel imports. Domestic consumption stands at 66.5 million litres.
A U.S. Senate panel last month cleared a bill to impose sanctions on companies providing Iran with gasoline and limit other business dealings with it if negotiations fail to resolve the standoff over Iran's nuclear activities.
Iran says its nuclear programme is aimed at generating electricity but the United States and other Western governments say they believe it is seeking to build an atomic bomb.
Oil Minister Massoud Mirkazemi said last week work was under way to boost gasoline production capacity at existing refineries by 33.5 million litres per day by 2013. A new refinery to be completed by 2014 would produce 35 million litres.
Iran has taken steps to reduce consumption of subsidised fuel, including launching a rationing scheme in mid-2007 and a government plan to end energy subsidies over five years.
For years it has struggled to develop its huge gas and oil reserves, with Western firms wary of investing in the country for fear of U.S. and U.N. sanctions.
Last month, the Iranian government approved a plan to issue bonds worth up to 1.5 billion euros on international markets to help finance priority development projects. (Reporting by Hashem Kalantari; writing by Fredrik Dahl; editing by Sugita Katyal)