Indications are growing in Iran that the country has come across problems with China over a mechanism to receive at least €20 billion in overdue debts from past sales of oil to the country through investments in the Iranian petrochemical projects.

Abbas Sheri Moqaddam, the managing director of Iran’s National Petrochemical Company (NPC), has been quoted by the domestic media as saying that China needs to modify its offered mechanism and come up with a better version that would take into account Iran’s post-sanctions business environment. 

“Iran’s conditions have changed after the removal of the sanctions against the country and that China cannot dictate its own plans on Iran,” Iran’s official news agency IRNA has quoted Sheri Moqaddam as saying. 

“By considering the removal of the sanctions, the foreign companies need to present more efficient business offers for cooperation with Iran over its petrochemical industry.”  

The official, who is also a deputy oil minister, made the comments in response to an IRNA question on whether the Iranian petrochemical companies have refused to receive loans from China as proposed in an industrial finance mechanism to settle oil money debts with Iran.  

“We cannot put China aside,” Sheri Moqaddam said. “China has good companies, but it should remember that the conditions they had considered for working with us during the sanctions era should be changed in the post-sanctions era.” 

China reportedly owes Iran over $20 billion in outstanding oil payments. The cash has been frozen in overseas banks after the US-led sanctions made it difficult for Beijing to transfer money to Tehran. Accordingly, the two countries have reportedly reached a deal to settle a part of the frozen money through China’s funding of Iranian petrochemical projects.

Amir Hassan Fallah, NPC’s director for investment affairs, said in early January that China has started the proceedings to provide funds as much as €16 billion for the development of Iran's petrochemical projects. However, he emphasized that the red-tape should be largely blamed for the delay in China's provision of financial facilities to Iran's petrochemical projects.

Fallah said the NPC has introduced 16 projects to the Central Bank of Iran (CBI) for receiving funds from China. 

He added that eight projects have already been approved by the CBI to the same effect.

On the same front, Iran’s media reported in October that China’s restrictive terms for financing energy projects have prompted some Iranian petrochemical companies to look for investors elsewhere, particularly in Europe. 

“Project owners awaiting finance prefer not to get it from China because it is expensive due to high fees,” said Marziyeh Shah-Daei, the NPC projects director, at the time.