Saudi Arabia’s Islamic Development Bank (IDB) is planning to finance an independent power project (IPP) in Iran’s Fars province before the end of 2012.

The Jeddah-based IDB is currently in due diligence to approve its first PPP-structured project in Iran, with a local power development company. The generated power will be sold to the state-owned power company, Iran Power Generation, Transmission & Distribution Company (Tavanir).

“We are hoping to reach financial close on this project before the end of 2012,” say pne source lending to the project. The project is one of several schemes in Iran being financed by the IDB, which include water, wastewater, transport and agriculture sector projects and one of the few private sector power schemes planned in the country.

Turbines for the IPP will be manufactured in Iran under licence from Germany’s Siemens, according to a source involved in the project.