Eight Million Tons Of Essential Goods Stuck Off Iran Due To Payment Issues

Iran’s Customs Administration says at least eight million tons of essential goods have been piling up on ships anchored off the country's southern ports apparently mainly due to payment issues. 

According to a report by Tasnim news agency, affiliated with the Revolutionary Guard, the deputy head of the Customs Administration has recently said that ships are stranded at ports – mainly at Bandar-e Emam Khomeyni (Imam Khomeini port) in the Khuzestan province and Bandar Abbas in Hormozgan province -- waiting to unload their cargo. 

The official said that the goods, a large part of which are food and animal feed, cannot be unloaded also due to a lack of permits necessary for them to be cleared. Some of the essential goods need three or four permits from the Ministry of Health, Standard organization and Plant Protection Organization, which oversees the quarantine processes. 

He said that about 1,800 to 2,000 trucks are being loaded every day and transferred from Imam Khomeini port, but the number of the trucks does not seem to be enough to avoid the blockage. 

But the main impediment for clearance of these goods has been lack of foreign currency for a long time. Importers need to receive US dollars or other foreign currencies from the government to pay suppliers before the ships would anchor at the ports and discharge their cargos. Iran is currently in a crisis for not having enough foreign currency and the US dollar has reached a historic high. One dollar can buy 450,000 Iranian rials, while five years ago the exchange rate was around 35,000.

The ships have to declare their goods first, and then the customs administration should remove the obstacles in the way of their clearance within seven days, but the process is not working smoothly. But the suppliers of the goods await payment first before ordering the ships to dock.

Since the government has removed the subsidy in the form of cheap dollars for the essential goods, many importers face difficulties providing the needed foreign currency. 

In January, Iran’s judiciary chief Gholam Hossein Mohseni Ejei said tens of ships have arrived in territorial waters of the country, but the Islamic Republic cannot unload them therefore the country must pay fines for the delay in discharging cargos. The delay in payments is the main reason that has disrupted flows of goods into the country.

Most ships should receive full payment right before they dock at a port to unload their cargo. If payment is not arranged, the ships wait off the coast. “Some of these ships are paid $25,000-65,000 per day as demurrage,” noted Ejei.

Some of these goods, which are not unloaded, added Ejei, “are damaged due to long waits by the ships, but these goods are necessary for the country,” he underlined.

Iran's currency has dropped by 30 percent since September and both the government and private importers face a financial crunch.

Food is exempt from the US sanctions on Iran over its nuclear program, but the impact of the sanctions on Iran's financial system have created complex payment arrangements with international companies.

Reuters reported on December 21, that dozens of merchant ships with grains and sugar are stuck outside Iranian ports after weeks of delays in payment.