Russia says it has approved a plan to construct a thermal power station in Iran in what could open a new chapter in economic cooperation between the two countries. 

The Russian government has approved an export credit to Iran for the construction of a thermal power station and electrification of railways, Russian Environment Minister Sergei Donskoi said Wednesday.

"It was approved," Sputnik news agency has quoted Donskoi as saying. The official did not reveal any further details.

Iran’s Energy Minister Hamid Chitchian in February announced the signing of a contract with Russia for the construction of a thermal power plant with the capacity of 1,400 megawatts in the southern Iranian port city of Bandar Abbas in Hormozgan province.

The project will be the first of a package of four thermal plant projects that Russia is expected to develop in Hormozgan.  The two countries had previously been discussing the development of two more power plants in Tabriz, in northwestern Iran, and two others in Tabas, northeastern Iran. The costs for construction of the projects are estimated to stand at above $10 billion.

Reports earlier said that Russian firms Technopromexport, Inter RAO and its unit Inter RAO Export will be involved in the construction and modernization of power facilities and delivery of equipment in Iran.

Iran and Russia had also last November signed another agreement worth €1.2 billion to electrify a train line, linking north-central Iran to the northeastern border with Turkmenistan.

The agreement – that was signed between Russian Railways and the Islamic Republic of Iran Railways (RAI) - envisaged the construction of power stations and overhead power lines along the Garmsar-Sari-Gorgan-Inche Burun route in Iran.