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Iran-Norway €2.5 Billion Deal: Genuine or Dodgy?

October 20, 2017
Reza HaghighatNejad
7 min read
Jan Erik Vikesaa, head of Saga Energy, in his office
Jan Erik Vikesaa, head of Saga Energy, in his office
Jan Erik Vikesaa, head of Saga Energy, at a trade fair
Jan Erik Vikesaa, head of Saga Energy, at a trade fair
The sparsely populated website of Amin Energy Developer
The sparsely populated website of Amin Energy Developer
Majid Shahrestani, CEO of Amin Energy Developers, with Jan Erik Vikesaa, head of Saga Energy
Majid Shahrestani, CEO of Amin Energy Developers, with Jan Erik Vikesaa, head of Saga Energy

On October 17, Reuters reported that Norway’s Saga Energy had signed a 2.5 billion euro ($2.94 billion) deal with Iran’s Amin Energy Developers to build solar power plants in Iran. The deal, which still depends on finalizing economic guarantees from Tehran, would see the construction of two gigawatts of power generation capacity in various locations in Iran over a four- to five-year period.

The deal will be Iran’s second big contract after the nuclear agreement — or, as it is officially called, the Joint Comprehensive Plan of Action (JCPOA) — went into effect on January 16, 2016, the first one being the the $4.8 billion contract with French oil giant Total to develop gas fields in the Persian Gulf, which was signed on July 3, 2017.

News media, both inside and outside Iran, have tended to interpret the new contract as a sign of Norway’s defiant attitude toward US President Donald Trump, who on Friday October 13, publicly announced that he refused to re-certify the nuclear deal and called for further isolation of Iran through new sanctions. "Norway is fully committed to the JCPOA and this is proof that we have taken the opening very seriously, and we will see more investment very soon," Norwegian ambassador Lars Nordrum told the French news agency Agence France Presse.

But whereas a big ceremony and a press conference followed the signing of the Total contract, the Norwegian deal was a simple affair without much pomp at the residence of Norway’s ambassador to Tehran. Why? Since the final stages of the deal are not formalized, maybe it was too early for a slick celebration. Or is there another reason for such a low-key acknowledgment of what has been reported as a big deal?


An Unexpected Switch

On September 15, Reuters also reported that Norway’s Scatec Solar was in talks to build its first solar power plants in Iran. The company’s CEO Raymond Carlsen said that the initial project currently under discussion would cost $120 million per 100 megawatts installed, for a total of roughly $132 million. But, a month later, it emerges that another Norwegian company planned to produce two gigawatts of solar energy in Iran.

According to Saga's development manager Gaute Steinkopf, the investment will be made over the next four to five years, allowing the installation of photovoltaic (PV) panels at various locations in Iran. Saga Energy will finance the project through bank loans and will also rely on pension funds and Norwegian state export guarantees. It expects to reimburse its investment through a 25-year off-take deal.

While Saga and Lithuania’s SoliTek will produce the solar panels, much of the remaining equipment will come from Taiwan’s Delta Electronics Inc.

Iran currently generates only 53 megawatts of solar energy. The new contract, when and if implemented, will generate around 40 times the existing capability, showing how important the deal will be for the government’s development and investment plans and policies as set out in its Sixth Development Plan (which covers the period 2016 to 2021). According to this plan, by 2021, Iran must be able to generate five gigawatts of renewable energy, meaning that the contract will get Iran 40 percent closer to that goal.

“We hope to build a factory in Iran to build the panels so that we are also generating jobs,” said Gaute Steinkopf at the signing. Saeed Zakeri, Amin Energy Developers’ head of international affairs, also showed his enthusiasm for the deal. “I’d like to thank Norway, which has always been one of the best friends to Iran, for this exciting opportunity,” he said.

A Capital of $30

So far so good. But if we dig a little deeper, the story becomes stranger, and various facts begin to reveal a somewhat different picture. 

The name “Amin Energy Developers” does not appear anywhere on the website that lists Iranian-registered companies. Instead, there are two other companies with similar but slightly different names in Persian.

The first is “Amin Energy Expanders,” which uses a Persian synonym for “developers.” This company was registered on June 26, 2016. Its website, in Persian, seems to be under construction and provides no information about the company. Its English site, however, claims that it has played an important role in Iran’s renewable industry for 15 years. The English site also provides an address, two phone numbers and a fax number, but not much more.

This company’s chairman is Yousef Armodeli,who who was the head of the Energy Ministry’s Renewable Energy and Energy Efficiency Organization (SATBA) until April 25, 2015. After his retirement, on June 26, 2016, he and his partners registered Amin Energy Developers with a capital of 100 thousand tomans, or less than $30. In late spring 2017, this company entered into a joint venture with the Executive Headquarters of Imam's Directive, a business entity under the direct control of the Supreme Leader, and launched a new company, Amin Clean Energy Expanders.

In any case, Majid Shahrestani, who came in as CEO of Amin Energy Expanders in late spring 2017, signed the contract with Norway. No further information is available about the company’s other projects, or about whether any other projects actually existed. It is unlikely that anything else has been implemented since summer 2016. So the claim of “15 years of experience” seems to be an outright lie.

...And a Capital of $4,000

But what about on the Norwegian side? 

Jan Erik Vikesaa, the founder and manager of Saga Energy, is an electrical engineer who worked between 2012 and 2016 with Aibel AS, a Norwegian service provider in oil, gas and renewable energy. When he was about to lose his job he decided to launch an independent company in renewable energy. He registered Saga Energy as a business in the summer of 2015 with a capital of $4,000 and, according to his LinkedIn profile, started working at the helm of the company in March 2016, 19 months ago. There are two photographs of Vikesaa online, one published on Facebook and a second that accompanies an interview  [Norwegian link] published on a section of the Norwegian business newspaper Dagens Næringsliv that focuses on new businesses and the people behind them. Both show him in ordinary office surroundings and suggest that his business is quite small; he does not appear to have a big entourage, or to be working as part of a large team. In the interview, he states that he was looking for skilled engineers who, like him, lost their jobs at Aibel and other petroleum companies.

In 2016, Saga Energy’s total operating income was only 24 Norwegian krone or $3 [Norwegian link]. Yet now it has entered into a €2.5 billion deal with Iran, which is only second to the contract with the oil giant Total. It seems strange, especially considering the company has never undertaken a large project. Among its projects are an experimental venture installing solar panels for offices, a project on solar energy for schools and installation of solar energy charging stations. Such projects would generate somewhere between 5 to 10 megawatts of energy, an amount nowhere near the two gigawatts the contract with Iran promises.

It is worth noting, too, that no official from Iran’s Ministry of Energy was present when the contract was signed, despite the fact that, in early 2017, Mohammad Sadeghzadeh, head of SATBA, met with Norway’s ambassador to talk about investments in renewable energy in Iran. Was he absent from the signing because he knew that this deal was merely a show without substance and he wanted to express his opposition to such a contract?

It is difficult to see how the details of the deal might add up. How can two companies with a total capital of less than $5,000 carry out a project worth €2.5 billion? Why would the Iranian side trust an inexperienced electrical engineer with such a huge project? In the days following President Trump’s speech, European countries have repeatedly reiterated their commitment to the JCPOA, especially when it comes to investments in Iran. But, by “investments,” do they really mean companies like Saga Energy?

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