Russia and Iran Sign $25 Billion Deal for New Power Plant

Russia and Iran have agreed to a $25 billion contract for the construction of a new nuclear power plant. The Sirik facility will be located in Iran’s southern Hormozgan Province, near the Strait of Hormuz. Iranian state media reported the deal in September 2025. The new units are designed for a combined capacity of roughly 5 gigawatts. This exceeds the total capacity of the existing Bushehr complex, which is under 3 gigawatts.

The expansion follows a decade of work on the Bushehr plant. Russia’s state nuclear corporation, Rosatom, signed a contract to complete the first reactor there in 1995. The unit did not begin full commercial electricity generation until 2013. Rosatom continues to operate the site despite regional conflicts. The company evacuated most of its staff after the US-Iran war began in February. However, personnel have returned to the site. By October 11, Rosatom reported that 135 engineering and technical specialists were back on the job.

Construction is progressing on two additional reactor units at Bushehr. Work on the second unit has passed the 60 percent completion mark. Rosatom targets an operational start for that unit in 2029. A third unit is also under construction. These projects are part of a wider strategic partnership between Moscow and Tehran. The Comprehensive Strategic Partnership Treaty entered into force in October 2025. A specific intergovernmental Cooperation Plan for 2024-2026 was approved in September 2024.

Analysts suggest the partnership benefits both nations but favors Russia. Nikita Smagin, an analyst at the Carnegie Endowment for International Peace, wrote in November 2025 that the balance is shifting in Russia’s favor. He noted that Iran needs investment and that Russia remains one of the few available sources. Dmitry Kovchegin and Arkady Mil-Man from Israel’s Institute for National Security Studies described Moscow’s approach as a calculated balancing strategy. They said Russia offers limited assistance while seeking to improve relations with the United States.

International oversight of Iran’s nuclear activities is currently limited. The International Atomic Energy Agency published a report on June 4. The agency conducted an inspection at Bushehr from June 1 to 3. However, inspectors could not access other declared nuclear sites during that reporting period. Four uranium enrichment facilities were among the sites missed. The IAEA could not verify the status of nuclear material at those locations. The agency also could not confirm whether Iran suspended enrichment, reprocessing, and heavy-water-related activities.

The inability to monitor these sites has raised concerns among nonproliferation specialists. They worry about the transparency of the growing nuclear cooperation. Some analysts point to Iran’s accumulation of uranium enriched to 60 percent. This level is not weapons-grade, but it can be enriched further to 90 percent. The US-based Arms Control Association stated in June 2025 that enrichment to 60 percent has no civil justification. The group argued this puts Iran in a better position to quickly produce enough weapons-grade material for a bomb.

Western sanctions continue to shape the economic relationship between Moscow and Tehran. Russia faces sanctions following its 2022 invasion of Ukraine. These measures target energy, finance, trade, and defense sectors. Iran has faced sanctions for decades over its nuclear program and regional military activities. Recent restrictions also target Iran’s ballistic missile program and its supply of drones to Russia. A 2025 analysis by the Center for Naval Analyses found that military and technical cooperation between the two countries has expanded since 2022.

The two nations have pursued new trade agreements and closer banking links. They have also increased cross-border trade and investment in strategic sectors. The Center for Naval Analyses noted that economic competition could constrain the long-term growth of their relationship. The Sirik deal would further tie Iran’s civilian nuclear energy sector to Russian technology and fuel supplies for decades. The project represents a major step in their expanding nuclear cooperation.