Critics say the ratification of a controversial motion by Iran's hardliner-dominated parliament that obligates the government to distribute free asphalt (Bitumen) worth around $600 million to contractors will lead to massive corruption.
On Wednesday, lawmakers approved the outlines of the motion despite much protest from critics. Free distribution of asphalt produced by refineries to contractors was included in the annual budget law for several years but the constitutional watchdog the Guardian Council and the Expediency Council scrapped it from the current year's budget bill. The current motion by Parliament revives the appropriation.
Critics say providing free asphalt to road construction contractors to help the development of rural roads only benefits the contractors and claim that contractors often use less asphalt in building roads than is actually required and sell the extra in the open market or illegally export it.
Using less asphalt in road construction can hugely affect the quality of the road surface which will degenerate and make resurfacing necessary in a much shorter time. Critics say supervision of contractors is not easy because of the complexity of calculating the actual amount of asphalt used in projects.
Many so-called "private contractors" in road construction are affiliated with the Revolutionary Guard's Khatam al-Anbiya Construction Headquarter -- the country's biggest construction contractor -- as well as other state bodies that have a better chance of winning highly-profitable contracts.
The government of President Hassan Rouhani has opposed the controversial and corruption-laden free distribution of asphalt. On Monday Oil Minister Bijan Namdar-Zanganeh said given the massive recent fluctuations in exchange rates, handing out free asphalt to contractors could cause serious concerns about the possibility of corruption.
Zanganeh's reference is to the possibility of well-connected companies receiving free asphalt and then exporting it for hard currency pocketing the money, while the government struggles to support the battered Iranian currency.
According to Mehr News Agency comparing the statistics on the amount of the asphalt handed out to contractors for free and the real amount of asphalt used in the country in the past indicates that a big part of the free asphalt was smuggled out of the country. A few years ago a member of the Oil Products Exporters' Union said annually around 500,000 tons of asphalt "disappeared" in road construction projects.
One metric ton of asphalt is worth on average around $400 in bulk. That means the potential for corruption based on the 500,000 metric tones mentioned can reach at least $200 million.
Another member of the Union on Wednesday told Mehr News Agency that more than half of the asphalt provided to contractors in recent years has been smuggled to neighboring countries.
In one instance in June the Police in Hormozgan Province discovered that 1.27 million liters of asphalt had been exported to India and Indonesia using fake documents and arrested two but many other cases go unnoticed.
The naturally occurring sticky, black and highly viscous asphalt is a by-product of crude oil refineries. It is primarily used in road construction and production of roofing felt and sealants.