Iran has begun the construction of a new nuclear plant in the southwestern province of Khuzestan, the country's atomic energy agency said Saturday.

Mohammad Eslami, the head of the Atomic Energy Organization of Iran, announced in televised remarks the start of construction of the 300-megawatt Karun power plant in the Darkhovin district of Khuzestan.

Construction of the plant will take seven years and is expected to cost between $1.5 billion and $2 billion, he added on state television.

Eslami said the power plant was "first set to be constructed by a French company", but that the firm had backed out of its "commitments" after the 1979 Islamic Revolution.

"Later, other countries avoided cooperation with the Islamic republic of Iran, because of the sanctions," he continued.

Under a landmark deal struck in 2015, Iran agreed to mothball its Fordo nuclear plant and limit its enrichment of uranium to 3.67 percent, as part of a package of restrictions on its nuclear activities aimed at preventing it from covertly developing a nuclear weapon.

Tehran has repeatedly denied that it seeks to develop an atomic bomb.

In return for the restrictions, major powers agreed to relax sanctions they had imposed over Iran's nuclear programme.

But the deal crumbled in 2018 when then US president Donald Trump pulled Washington out of the agreement and reimposed crippling economic sanctions.

Iran has since reopened its Fordo plant and last month said it had begun producing uranium enriched to 60 percent there.

It also operates a nuclear power plant in Bushehr, which produces 1,000 megawatts of power.

Talks to revive the 2015 pact began in April 2021, but have stalled in recent months, amid tensions between Iran and other parties to the deal.