31 May 2012BEIJING - Iran has cancelled a $2 billion contract for a Chinese firm to help build a hydroelectric dam in the country, Chinese state media said on Thursday, a move that risks upsetting Beijing, one of Tehran's most important economic and political allies.
Iranian President Mahmoud Ahmadinejad is due to visit China next week for a security summit, where he is expected to hold talks with his Chinese counterpart, Hu Jintao, on Iran's disputed nuclear program.
In March 2011, Iran's official IRNA news agency said China's Sinohydro Corp. had signed a contract with Iranian hydro firm Farab to build the dam, described as the world's tallest, in Iran's western province of Lorestan. It was designed to support a 1,500-megawatt power station.
The Global Times, a popular tabloid owned by Chinese Communist Party mouthpiece the People's Daily, said the Iranian government had decided to cancel the contract. The report did not cite sources or give a reason for the cancellation.
But it quoted Iranian media reports as saying Iran's central bank was "dissatisfied" with financing options offered by China.