PSA Agrees to Compensate Iranian Partner for Sanctions

PSA Peugeot Citroen has agreed to compensate its carmaking partner in Iran for losses incurred when PSA abandoned their venture in 2012 to comply with international sanctions against Tehran’s nuclear development program. The sanctions were lifted last month.

Iran Khodro says PSA will contribute €428 million ($478 million) to offset the four years it withdrew from the country, once one of the company’s strongest markets. A source tells the Financial Times no cash will be exchanged.

PSA will give its partner €36 million in “free” car parts, write off €80 million in debt and royalties due from Iran Khodro, provide €317 million in future discounts on engines and bring in experts to help train Iran Khodro staffers, according to the newspaper.

Last month PSA announced a €400 million investment program to update the partnership’s assembly plant outside Tehran and begin assembling as many as 100,000 vehicles annually by the end of 2017.