Sergei Shmatko, head of Atomstroiexport, the state company building the plant, said on Tuesday that the agreement should remedy concerns voiced by Tehran over Russian reluctance on the issue.

Shamtko, who met with Mahmoud Hanatian, vice president of Iran's atomic energy organisation, said the Bushehr plant is expected to be opened in September 2007 and to start producing electricity by November.

Meanwhile, Igor Ivanov, Russia's security council chief insisted on seeking a diplomatic solution to international concerns over Iran's nuclear programme at a meeting with Gholamreza Aghazadeh, Iranian vice president, who heads the country's nuclear organisation.

Aghazadeh (L) with Igor Ivanov in
Tehran

"We are firmly convinced of the need to resolve the question of the Iranian nuclear programme through the negotiating process, at the negotiating table," Ivanov said.

"... Iran should be guaranteed the right to peacefully develop nuclear energy, and also to remove the concerns of the international community regarding obligations under the nonproliferation regime," he said.

International concerns

The five permanent members of the UN security council, plus Germany, have been working to persuade Tehran to suspend uranium enrichment.

The United States and other nations have watched with concern as Russia has pushed towards completing its $800 million plant at Bushehr.

Washington says it fears the plant could be used by Iran to produce fissionable material for weapons.

In an attempt to ease concerns, Iran will ship spent fuel back to Russia, but rejected a proposal to conduct all of uranium enrichment on Russian soil.