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Investigating Factors Affecting Petrochemical Value Chain Completion and Policies for Improvement

Pakfetrat, Anahita | 2021

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  1. Type of Document: M.Sc. Thesis
  2. Language: Farsi
  3. Document No: 55992 (44)
  4. University: Sharif University of Technology
  5. Department: Management and Economics
  6. Advisor(s): Maleki, Ali; Mashyekhi, Ali Naghi
  7. Abstract:
  8. Despite the growth in Iran’s petrochemical production, most of the plants are concentrated upstream; although the government has made various interventions to promote industrial development. The literature review shows that government intervention is necessary to solve market failures, especially in developing countries; but it should be tailored to the specific context and especially the distribution of the power. Most experts believe that the cause of the above phenomenon is feedstock rent and the reason for its continuation is the political influence of petrochemical companies. While not rejecting this view, we try to provide policy recommendations by looking more closely at the issue and the background conditions. After examining the causes of low value-added products, the role of stakeholders in the continuity and changes in policies and the response of stakeholders to institutions are examined. The purpose of this work is to better understand the motivation and power of actors and to know the policies and values that affect petrochemical industry development. The results show that the low price of feed, low technology, and integration have caused a lack of investment in midstream petrochemical plants. Enactment of laws to reduce the risk of lack of feedstock for midstream petrochemical plants, providing financial guarantee from the government for financing, and amending the law of stepped discount and at the same time, the development of technology will cause new investors to enter the midstream sector of the petrochemical industry. These new Investors do not benefit from feed rent. The process of reducing support for upstream petrochemicals and its continuation with the removal of tax exemptions and the law of staggered discounts and technology development can lead upstream petrochemicals to complete the chain. Among the proposed policies, the implementation of removing the export tax exemption and the laws related to reducing the risk of supply of midstream petrochemicals’ feedstocks will probably face the resistance of the upstream petrochemicals. It is suggested that complementary industries follow the growth of midstream petrochemicals by lobbying with government and parliament officials or with the help of stakeholders who can gather around self-sufficiency and job creation, using the proposed policies.
  9. Keywords:
  10. Petrochemical Industries ; Industrial Policy ; Political Economy ; Value Chain Completion ;

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