UK FIRMS bidding for capital projects in Iran are to be given Government financial support for the first time in seven years, it emerged this week.
The Export Credit Guarantee Department, part of the Department for Trade & Industry and responsible for underwriting financial risk on overseas projects, has not backed UK firms on any major infrastructure work in Iran since 1993.
Restoration of cover was announced by minister of trade Richard Caborn this week while on a trade mission to Iran's capital Tehran. It follows improvements in diplomatic and trade relations.
The move is seen as a major step forward for UK firms.
Although in theory there has been no barrier to trading with Iran in the last seven years, the absence of ECGD support undermined confidence in the Iranian market.
'The lack of ECGD cover has hampered UK business for some time, ' said head of the Confederation of British Industry's African and Middle East department Philip McCrum. 'This sends the right signs to UK firms that Iran is open for business.'
Deals have also failed in recent years through lack of ECGD support, he added.
The level of export credit cover was cut back following the Islamic Revolution in 1979, when nationalisation led to siezure of foreign owned assets.
Concern about Iran's economic stability led to withdrawal of all but short term cover in 1993, ruling out support beyond two years. Construction projects have effectively been put off limits without ECGD guarantees.
This week's restoration of medium-term credit cover is intended to help UK firms secure work in Iran's liberalising market.
The Iranian government is planning a £50bn, five year spending spree, with massive development of its oil and gas industries and mining, manufacturing, energy, transport and leisure sectors.
Construction minister Nick Raynsford also visited Iran earlier this year and set in place the conditions which led to the ECGD decision. He told NCE that there were huge opportunities in the country but urged UK firms to be cautious about which projects they got involved with.
However, Mehdi Tavakoli, foreign investments manager for the huge £2bn plus Pars Special Energy Zone petrochemical development insisted that, while the ECGD problem had been a barrier to overseas firms investing in Iran, UK firms had nothing to fear.
'There is co-operation, ' he said. 'Iran is a different culture and there have always been political issues. But there has always been communication as well.' He urged UK firms to get involved in Iran's current development programme.
The ECGD said it would review Iran's economic performance and ability to pay off outstanding debts at the end of the year before extending cover further. It is understood Iran owes UK firms £20M.