TEHRAN (Fars News) — Iran’s Energy Minister Reza Ardakanian says the Russian government has issued a guarantee for a €1.2 bln loan that will be used by Iran to fund the construction of a major power plant south of the country.

Ardakanian said Iran will now accelerate bureaucratic procedures needed to start off the project in Sirik just outside the Persian Gulf on the Sea of Oman:

It is expected that the executive works of the project starts as soon as the administrative formalities (of the loan) are cleared on the Iranian side.

Russia’s Power Machines has been contracted by Moscow to use Russian funds to build the 1.4 GW thermal power plant in Sirik. Local companies will also contribute to the project which will also benefit from around €200 mln euros in Iranian finances. The project is considered a key step toward stabilizing electricity network in normally underprivileged regions in south and southeast Iran.

Iran and Russia made initial agreements on Sirik power plant in 2016 but execution of the project had stalled mainly over financial and administrative issues. Talks to start the project accelerated in 2018 after the United States withdrew from an international deal on Iran’s nuclear activity and imposed a series of economic sanctions on the country.

Russia has agreed to guarantee other loans that will be provided by Russian lenders to enable Iran to build out its infrastructure using both Russian an Iranian companies.