• Italy signs agreement with Iran for €3bn of project finance
  • Funding will be used for projects in Iran
  • Italian trade delegation that visited Tehran has signed key deals and agreements

Italy has become the first EU country to offer large-scale project finance to clients in Iran in the wake of the Joint Comprehensive Plan of Action agreed on 14 July between the Islamic Republic and the US, China, Russia, France, the UK and Germany.

Italian officials confirmed on 9 August that the Italian government has promised to provide €3bn ($3.3bn) for construction, infrastructure and industrial projects in Iran. They say that a memorandum of understanding has been signed for the amount, but which Italian financial institution will provide the money has not been decided.

On 4 August, a memorandum of understanding was signed in Tehran by Italy’s export credit agency Sace and the Organisation for Investment, Economic & Technical Assistance of Iran (OIETAI) and the Central Bank in Tehran during a two-day visit to Iran by an Italian trade delegation led by Italy’s Foreign Minister Paolo Gentiloni and Minister for Economic Development Federica Guidi.

The OIETAI is a government agency mandated to promote investment in Iran. The agreement with Sace is a significant development, analysts say. Finding ways to get paid for goods and services delivered to the Iranian market is one of the biggest challenges facing exporters. US banks and non-US banks with a presence in the US are subject to penalties for making or facilitating payments to and from Iranian counterparts.

Fata, a division of Italy’s Finmeccanica, confirmed on 9 August it had signed a €500m contract to build an 800MW combined-cycle power station in Bandar Abbas for Iran’s Ghadir Energy Investment. A Fata executive said he believed the project might be financed from the Italian export credit line.

Italy is Iran’s leading EU trade partner with two-way trade totalling $1.5bn a year. Officials say that Italy continues to import small amounts of oil from the Islamic Republic despite the EU ban on purchases of Iranian crude. They say these are being used to pay for amounts owed by Iran.

Italy’s Foreign Minister Paolo Gentiloni and Minister for Economic Development Federica Guidi met Iran’s Foreign Minister Mohammad Javad Zarif and Minister of Economic Affairs & Finance Ali Tayyebnia during the visit. Officials describe it as being highly-successful.

On 5 August, Italy’s Foreign Ministry said Iran’s President Hassan Rouhani had agreed to visit Rome within weeks. It will be his first visit to an EU capital since he was elected head of state in 2013.

Learn more of Iran from the Opportunity Iran 2015 report

A comprehensive assessment of the business landscape for regional and international companies, who want to understand the opportunities and risks of entering the Iranian market.