TEHRAN (AFP) – Beijing has offered a loan of one billion euros (1.2 billion dollars) to fund projects in Tehran, a report said on Sunday, in a sign of increased Chinese participation in the Iranian economy.

Iran’s Fars news agency, quoting a senior official from Tehran municipality, said the loan would have a repayment period of three to four years.

“The one-billion-euro Chinese funding is materialising,” Hossein Mohammad Pourzarandi said, adding that the loan would be used for several construction projects, including road networks, undertaken by the municipality.

In recent years China has emerged as Iran’s main trading partner, with increased exposures in key economic sectors of the Islamic republic, including oil.

Several Western energy companies have left Iran amid the increasing possibility of a new round of UN sanctions against Tehran for pursuing its controversial nuclear programme of uranium enrichment.

They are being replaced mainly by Chinese and Iranian firms.