Japan has launched negotiations aimed at resuming low-interest loans to Iran, following a six-year suspension. As a first step, Tokyo is to provide at least ¥100B (US$820M) for Teheran to finance construction of a dam on the Karun river in the southwestern province of Khuzestan, according to reports in Tokyo. Iran began construction of the plant in 1993 with Japanese financial support, but Tokyo has since frozen installments of a soft loan earmarked for the construction.

Japan stopped issuing new loans to Iran in 1993, but is still Iran’s biggest trading partner with exports of US$709M. Nine percent of Japan’s oil comes from Iran.

A foreign ministry spokesman declined to confirm reports of the new loan, but said Tokyo is ‘considering seriously’ the timing of resuming loans. ‘We have received a request from Iran for our support,’ the official said, ‘but our stance is that we cannot resume loans without international understanding.’ The ministry has been under pressure from the US, which introduced legislation in 1996 banning major investment in Iran’s gas and electricity sectors. The legislation runs out in 2001.

The first international review panel for the Karun 3 development was held at the project site on 8-13 December, reports the Iran Water & Power Resources Development Co (IWPC), part of the Ministry of Energy. IWPC is the owner of the plant: other companies involved at the site include the contractor Sabir of Iran, and consultants Mahab Ghods of Iran and Acres International of Canada.

The project, which according to IWPC is to be completed by mid 2001, includes a 205m high concrete arch dam in a narrow V-shaped valley in the Zagross mountains.

Panel members for the review were:

•Walter Wittke of Germany.

•Harald Kreuzer of Switzerland.

•Francesco Gallavresi of Italy.

•Aliakbar Ramazanianpour of Iran.

• Abbas Soroush of Iran.

The panel provided a general technical review of work progress, including advice on geotechnical concerns, grouting and concreting. They visited the site and have now produced a final report on the project.