Joint ventures with Japanese firms could be the way to break into the Iranian civil engineering market.
UK civils firms held back by the lack of project finance in Britain for projects in Iran could follow consultant Halcrow's lead and team up with Japanese partners.
With the level of investment into Iran guaranteed by the British government running at around £150M and many UK banks still holding back from lending in Iran, Halcrow teamed up with Japanese consultant Nippon Koei (NK) to work on a large dam project.
Under the deal, financed by £266.7M of loans from the Japanese Bank for International Cooperation (JBIC), Halcrow provided technical advice to the client - the Iranian Water & Power Resources Development Company in partnership with NK. Successful design and construction of the Masjed-ESoleiman dam near the Karun river in south west Iran has led to Halcrow being employed on four other major dam projects in Iran.
Japanese firms are keen to arrange other risk sharing joint ventures with UK firms. 'We have partners from France and Germany but we like to joint venture in Iran with the British, ' says NK director Shigemichi Hatao. 'British firms have more experience professionally and culturally in Iran than Japan. They are better at sorting out contract disputes and more advanced in environmental engineering.'
Japan, like Britain, is also a 'late runner' into the market, and wants to team up with UK companies to compete with more established firms from Germany and Italy, he says.
'We are looking for other opportunities for doing business in Iran and hope there will be more contracts with UK firms.'
Anglo-Japanese ventures in Iran have been strongly backed by the British government's Department of Trade & Industry.
Lawyer Kim Dinham-Peren, seconded to Trade Partners UK's Japan desk, was recently in Iran to discuss UK co-operation with Japanese firms after JBIC opened up direct credit facilities to Iran for the first time in 24 years in November, following a visit to Japan by Iran's president Khatami.
Dinham-Peren allays fears that Japanese banks will cut project finance to Iran amid talk of a domestic recession. Japan is not cutting aid overall but is reducing that which does not have to be tied to Japanese firms by 10%.
Japan is likely to remain interested in Iranian engineering projects because it is a big importer of Iranian oil and wants to remain a good partner, she says.
A large Japanese trade delegation visited Iran in July and more Japanese funded projects are in the offing.
Infoplus Kim Dinham-Peren tel: (020) 7330 9999.