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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Established in 2006 as a Community of Reality

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    Converting oil companies from self-financing to central financing raises controversy.. Will the sect

    Rocky
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    Converting oil companies from self-financing to central financing raises controversy.. Will the sect Empty Converting oil companies from self-financing to central financing raises controversy.. Will the sect

    Post by Rocky Thu 29 Aug 2024, 5:19 am

    Converting oil companies from self-financing to central financing raises controversy.. Will the sector face a new crisis?

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    Economy News - Baghdad
    [rtl]The government's move to transfer profitable oil and non-oil companies from self-financing to central financing has faced significant criticism, especially in the period preceding the approval of the federal budget schedules for 2024 and beyond. [/rtl]
    [rtl]The wave of criticism of the government decision came as a result of the resulting reduction in the powers of these companies and their confinement to Baghdad, compared to previous years in which these companies enjoyed broad financial freedom, whether in terms of projects or the disbursement of salaries and allocations.[/rtl]
    [rtl]Thousands of employees in oil companies in various Iraqi governorates, especially the southern ones, expressed their great dissatisfaction with this measure, following the decision being confirmed in the schedules, while they demanded the necessity of reversing it due to the great damage it causes to the oil sector and the oil industry in Iraq in general.[/rtl]
    [rtl]Oil sector centralization pattern[/rtl]
    [rtl]In this regard, the economic expert, Nabil Al-Marsoumi, said, “The corporate system has existed in the Iraqi oil sector since the mid-sixties of the last century, and Iraq was producing oil thanks to the self-financing system, even the previous dictatorial regime before 2003 was applying the system of financially and administratively independent public companies, which is the opposite of what the current governments want and what was implemented in the 2024 budget.”[/rtl]
    [rtl]Al-Marsoumi added, “All OPEC countries have long since abandoned the central management model of the oil sector, and private and public oil companies that enjoy financial and administrative independence are now directly responsible for all technical, financial and administrative details related to the various links of the oil industry, starting from the exploration, drilling, extraction, transportation, refining and marketing stages.”[/rtl]
    [rtl]He explained, "The role of the ministry is organizational and coordinating between oil companies, and this situation exists in all OPEC countries, including Iraq. Therefore, the new decision to return to the centralized model in managing the Iraqi oil industry may constitute a major setback for this industry."[/rtl]
    [rtl]Al-Marsoumi, the expert, points out that “such a decision could also lead to a decline in crude oil production and undermine the government’s efforts to achieve self-sufficiency in petroleum products due to bureaucracy, routine, multiple administrative circles, duplication in decision-making, and delays in making them in an industry that is characterised by dynamism and requires speed in making decisions.”[/rtl]
    [rtl]Al-Marsoumi confirms that “extraction companies, including the Basra Oil Company, are now being financed from the general budget, and the refineries’ profits have been reduced from 7,250 dinars to 2,250 dinars per refined barrel, meaning their profits have decreased from 2 trillion and 329 billion dinars to 722 billion dinars.”[/rtl]
    [rtl]Independent MP Mustafa Jabbar Sand described in a tweet on his account on the “X” website the decision to convert self-financing companies to central financing as “stupid”, indicating that the government decided to convert profitable self-financing companies in the Ministry of Oil to central financing, in the budget tables.[/rtl]
    [rtl]Liquidity confinement in the Ministry of Finance[/rtl]
    [rtl]In contrast, Kazem Al-Tawki, a member of the parliamentary oil and gas committee, believes that “transferring oil companies to central financing instead of self-financing will not harm the profits and salaries that their employees receive, and the Iraqi oil industry will not be harmed as is rumored, or production may decrease because the companies will remain at the same pace of work and implementation of their projects and contracts.”[/rtl]
    [rtl]Al-Tawki explains that “transforming oil companies and others to self-financing is simply confining all the liquidity available to self-financing oil and non-oil companies to be exclusively in the Ministry of Finance, and companies can request any financial amounts or allocations they want in the future from the Ministry of Finance.”[/rtl]
    [rtl]He believes that “the self-financing system, even if it has been adopted for many years in oil companies, does not mean that it should be maintained or not changed to the central system, as this matter depends on the government’s goals and policies in organizing its financial affairs as it deems appropriate.”[/rtl]
    [rtl]It is noteworthy that Iraq has 15 oil companies that have been operating under a self-financing system for many years and that manage their projects according to contracts supervised by the Federal Ministry of Oil. These companies contribute, along with the investment effort, to Iraq reaching a production of three million and 800 thousand barrels per day, reaching four million barrels per day.[/rtl]
    [rtl]The Ministry of Oil recently commented on the protests of oil companies regarding their funding to the central system, confirming in a statement that the rights of the ministry’s employees in all oil formations are preserved with regard to salaries, incentives and profits according to what is in effect, and there is no change in the budget law that affects these entitlements.[/rtl]
    [rtl]Protests [/rtl]
    [rtl]As a result, hundreds of employees of the Dhi Qar Oil Company organized a protest in front of the company building, rejecting central government decision No. 24600, which stipulates the transfer of oil companies from self-financing to central financing.[/rtl]
    [rtl] One of the protesters said during a protest rally on Wednesday that “this decision is unfair to these companies, whose self-financing was directed towards supporting social benefits, cancer and heart disease centers, and other service sectors.”[/rtl]
    [rtl]He pointed out that their stand today comes as a rejection of this unfair decision and a demand from the central government to reverse this decision and maintain the companies’ self-financing.[/rtl]
    [rtl]In Maysan Governorate, a number of employees of Maysan Oil Company organized a protest in front of the company’s headquarters in the center of Amara city, protesting the decision to convert oil companies from self-financing to government-financing.[/rtl]
    [rtl]A number of them said that they are strongly protesting the decision of Prime Minister Mohammed Shia al-Sudani regarding the transfer of the work of oil companies from self-financing to government financing, and that this matter will restrict the powers and limit them to Baghdad, compared to previous years in the history of those companies, when they enjoyed financial freedom and what was related to projects and the disbursement of salaries and allocations.[/rtl]
    [rtl]They added that such a decision could lead to a decline in crude oil production and undermine efforts to achieve self-sufficiency in petroleum products due to bureaucracy and routine.[/rtl]
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