China signed a $2 billion contract with Iran to build the world's tallest dam in the Islamic state, the Iranian energy minister was quoted as saying by the official IRNA news agency on Monday.
"One of the major events in the water sector of the country is to sign the finance contract with China for execution of Bakhtiari dam. This is the world's tallest dam," Majid Namjoo told IRNA.
"The $2 billion contract ... was signed between Iran and China today and construction of the dam will start in next Iranian year." Iranian new year starts on March 21.
Mohammadreza Rezazadeh, managing director of Iran's Water and Power Resources Development Company, said Chinese firm Sinohydro Corporation and Iranian counterpart Farab would jointly build the dam in Iran's western province of Lorestan, state-run English language Press TV website reported.
The dam would be 315 meters high (1,033 feet), holding Iran's largest reservoir of about 4.8 billion cubic meters. The project will support a 1,500-mgw hydroelectric power station.
The United States and its allies fear Iran is developing atomic bombs under cover of a civilian nuclear program. Tehran says it needs the technology only to generate power to meet its booming domestic demand.
Iran has been hit by foreign sanctions and Western firms are wary of investing in the Islamic Republic for fear of sanctions. State-owned Asian firms are less susceptible to Western pressure to stay away from the Iranian market.
Iranian officials have repeatedly played down any effect of sanctions on the Islamic state. "We welcome investment by other countries in our projects," the minister said after signing the contract, IRNA reported.