Russia and Iran have finalised a $2bn credit line that will be used to fund a railway project in northern Iran and a thermal power plant in southern Iran.

Reports in Iran say the credit will be repaid over ten years with a three-year grace period at the start of the loan period. The interest rate is below 5 per cent.

Tehran also says that it has completed the preparations for establishing banking facilities with Russia that will facilitate trade between the two countries in their own currencies and avoid restrictions imposed on international money markets by US-led sanctions.

Tehran and Moscow are working together on a number of key projects.In 2014, Russia agreed to build up to eight nuclear reactors for Iran to pursue its nuclear power programme. The agreement will involve Russian companies building two nuclear reactors, with scope for an additional six reactors if required.