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Iran Cancels $2 Billion Dam Deal With China

Chinese and Iranian media are reporting that Iran has canceled a $2 billion contract for a Chinese firm to help build a major hydroelectric dam in Iran's southwestern Lorestan Province.

Iranian Energy Minister Majid Namjou told media that the project has instead been handed to Khatam al-Anbiya, the construction arm of Iran's Revolutionary Guards Corps.

The Iranian news agency Mehr reported that Iran's central bank and a government committee rejected an offer from China's Sinohydro Group LTD to build the Bakhtiari dam, but it did not elaborate on the reasons behind the move.

Iranian media reported that central bank was "dissatisfied" with financing options offered by China.

The dam was designed to support a 1,500-megawatt hydropower station.

The move is likely to upset China, one of Iran's key economic and political allies.

Based on reporting by Mehr,, and Reuters