Iran’s Energy Minister: ‘We have a huge number of projects that need foreign investment’

Iran's Energy Minister Hamid Chitchian is pictured giving an interview to Asia House Digital Editor Naomi Canton

Iran's Energy Minister Hamid Chitchian is pictured giving an interview to Asia House Digital Editor Naomi Canton

Iran’s Energy Minister: ‘We have a huge number of projects that need foreign investment’

13/07/16

By Naomi Canton

Iran is seeking foreign investment in its fast-growing power and water sector now that European economic sanctions have been lifted on the country.

Hamid Chitchian, Iran’s Energy Minister, made the remarks during a trip to London this week to meet with the Rt Hon Amber Rudd MP, who was, at the time of his visit, Secretary of State for Energy and Climate Change. However on Wednesday night she was appointed as Home Secretary in Theresa May’s new Cabinet.

Mr Chitchian was also in London to meet British companies and banks in a bid to attract investment to Iran’s energy and water sector.

Speaking through a translator on Wednesday morning, Mr Chitchian said, in an interview with Asia House, that Iran was looking for US$30 billion in foreign investment in electricity over the next five years and US$12 billion in investment in water and wastewater services in Iran.

He said that several MoUs were being signed this week between the Iranian and UK governments on the trip.

“I am here in London on invitation by the the Secretary of State for Energy and Climate Change the Rt Hon Amber Rudd MP [now Home Secretary],” Mr Chitchian said.

We have signed two MoUs between the Iranian and UK government on this trip. We are hopeful to sign two more. The first defines the framework between the Ministry of Energy in Iran and the Department of Energy and Climate Change in the UK.

The second MoU is about export finance between the two ministries. The third will be about renewable energies and the fourth has not been announced yet.”

Iran generates over 75,000 MW of electricity per year and is scheduled to add approximately 50,000 MW of new capacity in the next decade, he said.

In addition 33 million subscribers in Iran will benefit from the smart grid which is being developed, he said.

Iran’s electricity production industry is ranked 14th in the world. Apart from providing for growing domestic consumption, it exports electricity to its neighbours which includes Iraq, Turkey, Afghanistan and Pakistan.

“The aim of this trip is to establish cooperation between Iranian and UK companies on energy and water. I will also be having meetings with managers of numerous UK companies and investors,” Mr Chitchian said.

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Iranian Energy Minister Hamid Chitchian spoke to Asia House corporate members at a private briefing this morning ahead of the interview

He said interested UK companies he had met were already looking into how to finance power and water projects in Iran. “We have also had some discussions with UK banks,” he added.

“It is natural that both Iranian and British companies will benefit from these transactions. Iran has clear and transparent regulations to support foreign investors and we would be a great market for UK companies,” he said.

He said there had been strong interest already from companies in China, South Korea and Germany in  projects in Iran. “We have spoken to Siemens,” he said.

Earlier this year the German engineering and technology services company signed a MoU to expand and improve Iran’s overall power and electricity system with Iranian power and infrastructure group Mapna.

Iran lies in an arid and semi-arid region meaning water is of great importance and dams play an important role in harnessing water reserves.

In fact Iran ranks third in the world in dam construction.

“We have already constructed 160 large dams which are now operating and a further 90 dams are under construction”, Mr Chitchian said.

Regarding concerns foreign investors may have about the arbitration of international disputes and enforcement of contracts, Mr Chitchian said: “We have articles on arbitration in all of our contracts. These clauses depend on the negotiations between companies and what they agree on. This should not prevent any company from entering Iran.”

He said there were no restrictions on foreign companies entering Iran and any foreign business could establish a 100 per cent foreign owned company in Iran. “If a foreign company finds an Iranian established joint venture then this contributes to their success in the country, though it is not compulsory,” he added.

The JCPOA, commonly known as the Iran nuclear deal, was signed in July 2015 and implemented on 16 January this year. As a result of Iran meeting its nuclear commitments, the United States, the UN Security Council and the EU agreed to lift many sanctions on Iran. The expectation was that this would give a huge boost to the Iranian economy, which had spent 10 years isolated from the global economy.

Hamid Chitchian, Iran's Energy Minister, left, with Michael Lawrence, CEO of Asia House, right

Hamid Chitchian, Iran’s Energy Minister, left, with Michael Lawrence, CEO of Asia House, right, pictured at a briefing and roundtable discussion with Asia House corporate members

“There are a huge number of projects right now in Iran and every day they are increasing,” Mr Chitchian said.

Mr Chitchian gave the interview to Asia House after joining Asia House corporate members for a briefing and roundtable discussion on the energy and water sector in Iran.

Corporate members represented at the briefing included Shell International, KPMG, DWF, Linklaters, Eversheds, G3, Amec Foster Wheeler and Mitsui & Co Europe.

naomi.canton@asiahouse.co.uk

Asia House is currently running a series of briefings and seminars to help bring clarity to the complex issues raised by Brexit. To see all the events we have lined up click here. For more information click here.

To read an interview with Hamid Tehranfar, Vice Governor of Banking Supervision Affairs of the Central Bank of Iran click here.

Peyman Ghorbani, Vice Governor of Economic Affairs of the Central Bank of Iran, also gave an interview to Asia House after sanctions were lifted. Click here.