TEHRAN: French carmaker Renault will sign a long-awaited deal on Monday to build more than 150,000 cars a year in Iran, a source close to the country’s industry ministry told AFP.

Unlike its chief competitor PSA, which makes Peugeots and Citroens, Renault never fully quit Iran during the sanctions period and already makes some 200,000 cars a year there.

But it had to put a brake on its growth plans until Iran concluded a nuclear deal with world powers that came into force in January 2016.

The new deal puts Renault in partnership with Iran’s Negin Khodro and the government’s Industrial Development and Renovation Organisation (IDRO).

“Renault will hold a 60-percent stake, Negin Khodro will have 20 percent and IDRO 20 percent,” the source said, without giving a figure on how much money is being invested.

Negotiations were painstaking, with Renault reportedly reluctant to meet Iranian requirements to source 40 percent of their parts from local manufacturers, which have struggled to keep up with international standards.

“Renault officials believe that since their company is directly investing in local production, it should not be compelled to work with Iranian parts makers,” IDRO chief Mansour Moazami told the Donya-e-Eqtesad newspaper recently.

The factory will be based at Saveh, around 120 kilometres (75 miles) southwest of Tehran, and follows a preliminary deal signed in September by Industry Minister Mohammad Reza Nematzadeh during a visit to Paris.

PSA, which quit the country when international sanctions hit in 2012, has been quick to rebuild its presence in Iran, which was the company’s main engine of growth last year.

It signed a 400-million-euro deal in June 2016 to build 200,000 Peugeots a year with Iran Khodro, and another with Iran’s SAIPA to build a similar number of Citroens.

Overall production in Iran is expected to reach two million cars a year by 2020, up from 1.2 million in 2016.

French firms have been at the forefront of rebuilding trade ties with Iran since the nuclear deal, with energy giant Total signing a billion-dollar gas deal last month despite mounting pressure from Washington to isolate the country.—AFP