Despite their significant capacity to generate employment, localize technology, and create added value across the petrochemical value chain, downstream industries in Iran remain underdeveloped. In an interview with Shargh Media Group, Najabat said the sector’s stagnation stems primarily from poor governance structures and the lack of a specialized regulatory framework.
Many observers argue that downstream petrochemical industries have lagged behind for years. Najabat identified two decisive factors behind this underperformance—ineffective stewardship and the absence of expert regulation—arguing that correcting these would automatically resolve many secondary challenges.
“Unfortunately, in recent years there has been neither a clear roadmap from the responsible authorities nor a specialized body to regulate supply and demand or manage feedstock allocation,” he said. “The result has been wasted resources and a weakened petrochemical value chain.”
Najabat explained that formal responsibility for downstream petrochemical development lies with the Ministry of Industry, Mine and Trade (IMT), but the ministry’s broad mandate and frequent managerial changes have undermined its ability to focus on this strategically important sector. “Organizational instability has deprived downstream industries of the sustained attention they require,” he noted.
He added that most downstream petrochemical units are small-scale and capital-constrained, making it unrealistic to expect them to independently develop essential infrastructure such as petrochemical parks, utilities (water, power, steam), or export marketing networks. “This is precisely where a central steward must step in,” Najabat said. “The role of the steward is to design and manage shared infrastructure and provide common services. Even basic steps such as preparing a prioritized list of viable projects or conducting preliminary feasibility studies (PFS) could significantly ease investor entry. Yet such planning has largely been absent, resulting in chronic stagnation.”
Addressing regulatory failures, Najabat said the lack of a competent and authoritative regulator has severely disrupted feedstock supply and distribution. “Even the limited number of active downstream units are operating at only about 40% of their nominal capacity,” he said. “In effect, 60% of the capital invested in this sector is idle. Under such conditions, no rational investor is willing to take the risk of entering the market.”
He warned that without regulation, the relationship between feedstock producers, distributors, and downstream consumers becomes distorted. “In the absence of a transparent allocation system, a significant portion of feedstock is captured by intermediaries, throwing the entire production cycle out of balance,” he said.
Najabat outlined several structural problems in feedstock supply, including insufficient domestic production relative to demand and inequitable distribution mechanisms. “In some cases, feedstock reaches downstream consumers at 1.5 to 2.5 times its original exchange price due to intermediary margins,” he said, adding that sanctions and currency volatility further exacerbate costs, which are ultimately passed on to end consumers. He also pointed to price discrepancies between imported and domestically produced feedstock as another deterrent to investment.
As a way forward, Najabat emphasized the need for practical, structural reforms rather than rhetorical solutions. He proposed redefining stewardship by transferring responsibility for downstream petrochemical development from the IMT Ministry to the National Petrochemical Company (NPC). “Downstream development delivers the highest value added and employment, but it requires focus, expertise, and integrated management,” he said. “NPC already oversees feedstock production, making it better positioned to guide downstream growth.”
He stressed, however, that NPC should not directly build or own downstream units. “Its role should be developmental and regulatory—providing policy guidance, infrastructure planning, technical consulting, and export marketing support,” he said, suggesting that NPC could charge investors for these services to ensure transparency and sustainability.
Najabat also called for the establishment of an independent mechanism to regulate feedstock markets. Until domestic midstream capacity is expanded, he said, imports should be used to bridge supply gaps and maintain market balance. “This would prevent the emergence of intermediary-driven markets and stabilize supply and demand,” he said. In such a framework, NPC—working with producer and consumer associations—could set prices for blended feedstock sourced from both domestic production and imports.
Targeted imports, he added, should be viewed not as a threat but as a strategic tool. “Through joint ventures or technology purchases from foreign firms, imports can also facilitate technology transfer and help neutralize the impact of sanctions,” Najabat said.
He concluded by stressing that sanctions alone are not the root cause of downstream underperformance. “Sanctions matter, but the real problem lies in domestic decision-making,” he said. “Whenever we have had coherent management and stable policies, the impact of sanctions has been far less severe. Without a clear steward and regulator, even in the absence of sanctions, stagnation is inevitable.”
“The way out is to restore order, transparency, and expertise to the petrochemical value chain,” Najabat said. “Downstream industries are engines of employment and development. By reforming stewardship and regulation, ensuring transparent feedstock allocation, and using imports intelligently, this sector can reclaim its rightful place in the national economy and evolve into a model of indigenous, export-oriented development.”
Source: Shargh Daily, Petrochemical Industry Special Supplement