said the land had better be allotted to the park of technology,” he said.
“IOIV was established to provide financial support in this sector. This fund has 20 contributors, four of which are Petroleum Ministry subsidiaries. The rest are private companies,” he said.
Karbasian said: “This fund has been set up with Petroleum Ministry support. It can recapitalize in the future and attract new capitals.”
He said that Iranian manufacturers would be granted low-interest loans (banking interest rate of 8%), adding that commodities could be directly supplied on the market.
Karbasian touched on an IRR 10,000 billion agreement in the Venture Capital Fund sector, adding: “We hope to see the growth of knowledge-based companies in the future.”
IOIV Financing Measures
Masoud Jafari Estahbanati, CEO of IOIV, said the fund had taken widespread measures for financing startups and companies working in the oil sector.
“Financing is 100% based on partnership and oil industry actors will have to put no deposits,” he said.
IOIV was established by 12 stakeholders and an initial capital of IRR 1,030 billion.
He stressed the necessity of facilitating the financing of oil startups and enterprises, saying: “Guaranteed purchase at the first time of manufacturing, guaranteed facilities, contractual guarantees and partnership packages are among this fund’s measures for facilitating financial service to stakeholders and actors.”
Estahbanati touched on guaranteed purchase, saying: “Manufacturers are often concerned with lack of guarantee for the sales of their products on the market when they first manufacture and supply a product. Meantime, clients are willing to purchase from companies registered in the petroleum industry vendor list. IOIV has taken into account the issue of guaranteed purchase for the first time to allay this concern. It signs agreements with the manufacturer rather than the client.”
Under offtake agreements, manufacturers are assured that they can sell a product on the market; otherwise, IOIV will settle with them.
He referred to the €10 million offtake agreements signed for the first time in Iran.
An offtake agreement is an arrangement between a producer and a buyer to purchase or sell portions of the producer's upcoming goods. An offtake agreement is normally negotiated prior to the construction of a production facility—such as a mine or a factory—to secure a market for its future output.
Offtake agreements are typically used to help the selling company acquire financing for future construction, expansion projects, or new equipment through the promise of future income and proof of existing demand for the goods.
Offtake agreements are legally binding contracts related to transactions between buyers and sellers. Their provisions usually specify the purchase price for the goods and their delivery date, even though the agreements are reached before any goods are produced and any ground is broken on a facility. However, companies can usually back out of an offtake agreement through negotiations with the other party and with the payment of a fee.
Offtake agreements are frequently used in natural resource development, where the capital costs to extract resources are significant and the company wants a guarantee some of its product will be sold.
The offtake agreement plays an important role for the producer. If lenders can see the company has clients and customers lined up prior to the beginning of production, they are more likely to approve the extension of a loan or credit. So offtake agreements make it easier to obtain financing to construct a facility.
Knowledge Role
Reza Dowlatabadi, President of Bank Tejarat, said knowledge-based companies had been focused upon in recent years with a view to improving their quantity and quality.
“Knowledge-based companies have found their role in the economy,” he said.
“Knowledge-based companies have been faced with numerous challenges, including financing and business management. Many also consider knowledge-based companies’ projects to be venture projects.”
‘Fortunately, given the measures taken so far and memorandums signed with IOIV we have partly removed these challenges and the banks have tried their best in directing resources to these companies. Bank Tejarat has provided knowledge-based companies with many facilities and export guarantees,” he said.
“Today’s MOU was signed with a view to provide financial support and guarantee purchase of products which knowledge-based companies need in the oil sector. Knowledge-based companies can benefit from banking facilities,” said Dowlatabadi.
“We introduce these companies to Bank Tejarat to receive necessary facilities for the manufacturing of equipment. In the next phase, based on NIOC guarantees for the purchase of products, the manufactured equipment will be put at the disposal of NIOC for two years. In other words, the loan will be paid in two phases, first to knowledge-based companies for manufacturing and then to NIOC after manufacturing,” he said.
“The interest rate of the loan is 8% over a 24-month period. Apart from loans, these companies would be able to benefit from LC services,” he said.