UK Agency Signs MoU to Cover Iran Projects

UK Agency Signs MoU to Cover Iran ProjectsUK Agency Signs MoU to Cover Iran Projects

The Energy Ministry and the UK Export Finance (UKEF) signed a memorandum of understanding on Tuesday to guarantee financing by the top UK export credit agency for energy projects carried out by British contractors in Iran.

The MoU was signed by Bahram Taheri, senior adviser to Energy Minister Hamid Chitchian and Gordon Welsh, head of UKEF's Business Group at the Iranian Embassy in London, IRNA reported.

The agreement is part of a flurry of deals expected to be signed and discussed during the London visit of a high-ranking Iranian delegation that includes Chitchian and officials from the Central Bank of Iran.

"This institution will provide insurance for all [British] projects [in Iran] that require financing and investment," Chitchian said. "We hope this step will ease the process of project financing by British agencies."

Chitchian is scheduled to meet top British officials, including Amber Rudd, the UK Secretary of State for Energy and Climate Change, Lord Lamont, chairman of the British-Iranian Chamber of Commerce, Alister Wood, marketing manager of Siemens in England as well as the executive directors of Lloyds Banking Group.

UKEF has been quick in strengthening ties with Iran after nuclear-related sanctions against Tehran were lifted in January.

The state-run agency says it is committed to working with the Export Guarantee Fund of Iran to identify trade opportunities and also co-finance and co-guarantee projects in third countries involving British and Iranian exports.

"Oil and gas comes to mind whenever there is talk about Iran, but it is a country rife with investment opportunities in a wide range of areas," Chitchian noted, adding that the oil and gas accounts for one-fourth of Iran's economy.

There is and will be plenty of opportunity available to British firms in Iran's power industry as the country is planning to introduce wide-ranging energy programs and upgrade its power grid to a more efficient and effective smart network.

What makes a power grid smart is the digital technology that allows for two-way communication between the supply source and customers. A smart grid allows for more efficient transmission and quicker restoration of electricity after power cuts and disturbances, among other things.

"Iran is among the six countries with the technology to build gas turbines," he added.

  Power Sector Outlook

Iran is ranked 14th in the world in power generation, according to official reports, It exports electricity to Afghanistan, Iraq, Turkey and Pakistan and exchanges electric power with Azerbaijan, Turkmenistan and Armenia.

The country has an installed power generation capacity of around 75,000 megawatts. It needs billions of dollars to upgrade its aging electricity infrastructures and raise production capacity by more than 5,000 MW per year over a decade, with 7,000 MW planned to come from renewable energy sources.

"We have a long way to go," said the energy minister. "Iran is a huge market and British firms and financial institutions can make a meaningful contribution to, and take part in it."