U.N. report allowing for Iran sanctions relief may come on Friday

The United Nations' nuclear watchdog is likely to confirm on Friday that Iranhas curtailed its nuclear program as agreed with world powers, paving the way for sanctions to be lifted, Iran and a diplomatic source said.

A report by the U.N. International Atomic Energy Agency (IAEA) certifying that Iran has met all its obligations under the deal, known as the JCPOA, is a crucial precondition for sanctions reliefto kick in.

"The IAEA will issue its final report on Friday to confirm Iran has met its commitments under the JCPOA," Deputy Foreign Minister Abbas Araqchi said, according to the Fars news agency.

A diplomatic source also said the IAEA's report was likely to be issued on Friday, while U.S. Secretary of State John Kerry said the deal's "Implementation Day" would take place "likely within the coming days". Another diplomat based in Vienna, the home of the IAEA, also struck a cautious note.

"There's ongoing hard work to reach Implementation Day. Good progress is being made, but there are still areas to finalize and no date has been set," the diplomat said.

The IAEA declined to comment.

Under the agreement reached in July last year, Tehran promised to reduce its stockpile of low-enriched uranium to below 300 kg (660 pounds), cut the number of its installed uranium-enriching centrifuges to around 6,100 from 19,000, and decommission the Arak heavy water reactor.

Tehran has drastically reduced the number of centrifuges installed at the Fordow and Natanz enrichment sites within the last few months, and shipped tonnes of low-enriched uranium materials to Russia.

"What we're expecting is that the IAEA final report will be able to say that Iran is in compliance," said a senior western diplomat, speaking on condition of anonymity.

"Our expectation is that (the report would be submitted) at some point either right at the end of this week or at some point next week," he said.

Kerry said on Wednesday the United States was informed that calandria, or central vessel of the Arak reactor, had been removed and it would be filled with concrete in coming hours.

INSPECTORS CALL

On Tuesday, the spokesman for Iran's atomic energy agency said IAEA inspectors had arrived in Iran to verify the final steps.

"The technical work under way is very demanding, but the Atomic Energy Agency of Iran has been trying to do it as fast as possible," Behrouz Kamalvandi was quoted as saying by the Tasnim news agency.

British Prime Minister, David Cameron defended the deal with Iran on Wednesday, saying "Iranhas granted the International Atomic Energy Agency unprecedented access."

"It's a good deal, it takes Iran away from a nuclear weapon, but we should enter into it with a very heavy heart and a very clear eye and a very hard head," Cameron told MPs in the Prime Minister's Questions.

The U.S. House of Representatives passed legislation on Wednesday to restrict President Barack Obama's ability to lift sanctions on Iran, but the White House has promised to veto it.

Araqchi said on Wednesday that Foreign Minister Mohammad Javad Zarif and Federica Mogherini, the European Union's representative for foreign affairs, would issue a joint statement on Saturday or Sunday on the implementation of the deal and the lifting of EU, U.S. and U.N.sanctions.

"Implementation will be very soon," said another senior Western diplomat.

"Everything is ready for the lifting of sanctions. The U.S. and European Union are ready. To some extent it's just about pressing the button," the diplomat added.

Iran, keen to export oil freely again once sanctions are dismantled, has repeatedly said that it has enriched uranium only to create an alternative source of electricity.

The IAEA's Board of Governors passed a resolution in December ending its long-running inquiry into whether Iran once had a secret nuclear weapons program or so-called "possible military dimensions" (PMD).

Iran released 10 U.S. sailors on Wednesday after holding them overnight, bringing a swift end to an incident that had rattled nerves ahead of the expected implementation of the nuclear deal.