Turkey and Iran set to sign electricity accord

ANKARA, May 31 (Reuters) Turkey and Iran have reached an agreement in principle over electricity trade and dam and power station construction, and will sign the accord today, Turkish Energy Minister Hilmi Guler said.

Guler's Iranian counterpart Parviz Fattah also told reporters that the capacity of an existing power line between the two countries could increase by 2.5 times and two further links could be constructed.

''Iran has created a very inviting atmosphere for investing there,'' Guler said, highlighting improved trade and energy ties between the two countries.

''The power station to be built could use either natural gas, or oil products, and the electricity to be produced could either be sold to Turkey or some of it could be utilised in Iran,'' Guler added, making clear further discussions would follow.

Fattah said Guler would visit Iran in the near future.

Asked about possible negative reaction to the deal from the United States, Iran's arch-foe, Guler said: ''We had no discussions on this... This deal is a continuation of relations between two neighbouring countries.'' The United States has no diplomatic relations with Iran, which it considers a sponsor of international terrorism.

Western countries, led by Washington, also accuse Tehran of plotting to build atomic weapons. Iran says its nuclear programme has purely peaceful motives.

Turkey, a NATO ally of the United States, is also wary of Iran's nuclear plans but has managed to forge good working relations with its neighbour in a number of areas.

Iran is a key provider of oil and natural gas to Turkey and the two countries are also united in their opposition to the formation of a Kurdish state in northern Iraq, fearing it could encourage separatism among their own Kurdish populations.

REUTERS RJ KN1907