The latest agreement between HSBC and NPC is the first loan facility between a bank and an Iranian borrower directly guaranteed by ECGD since the agency resumed medium-term cover for Iran in October 2000.

'The resumption of export credit cover for Iran by the UK is an important step which needs to be fully supported by the international banking community,' says John Richards, senior representative for HSBC in Tehran. 'The HSBC group's long association with Iran and international presence puts us in a strong position to partner companies around the world in strengthening their business interests with Iran, which in our view offers considerable potential in the medium to long term.'

Industry sources say ECGD is also negotiating to provide cover for a styrene monomer plant in the Bandar Assaluyeh special economic zone. NPC awarded the estimated $100 million contract to Snamprogetti last September (MEED 21:9:01).

ECGD is expected to become more active in providing cover to companies doing business with the Islamic republic, following the settling of the dispute between Iran and the UK over outstanding debt. The estimated £100 million ($142 million) debt had been subject to discussions between both countries because Tehran refused to recognise debts dating back to the years before the Islamic revolution in 1979.