Chinese investment riddles

The Sri Lanka Ports Authority (SLPA) has signed an agreement with China Communications Construction Company Ltd (CCCC) to develop a port city on 230 hectares of reclaimed land in Colombo, Sri Lanka.

CCCC is the same company which signed a memorandum of understanding with the Maltese government to conduct a feasibility study on the bridge linking Malta to Gozo.

Back in June, reacting to criticism on the government's decision to sign a memorandum of understanding with the State-owned Chinese company which is still blacklisted by the Word Bank, Prime Minister Joseph Muscat revealed that this agreement was a part of "wide ranging discussions with the Chinese government" on various unspecified projects.

The declaration led to speculation on the possible role of China in the new Labour government's plans to kick-start the Maltese economy. 

The offer by CCCC to conduct the feasibility study on a bridge linking Malta to Gozo costing €4 million for free increasingly looked like an aperitif for more substantial Chinese investment.

The Maltese government has also recently issued a call for expression of interest in land reclamation projects around the Maltese islands.

The Colombo port project, dubbed as the "port city", shows that Chinese construction companies are emerging as leaders in this sector.

The $15bn Colombo Port city is to be built by reclaiming the sea water front sheltered by the new breakwater at an investment of €1 billion.

Construction will begin in September, and the plan is to complete the land reclamation within 39 months. The port city - which integrates business, residential and leisure areas - will then include a Formula One racetrack, a small yacht marina, a mini golf course and areas for water sports.

CCCC will invest in reclaiming the land and infrastructure of the port city, and will be given around 50 hectares of reclaimed land on a 99-year lease in return for its investment.

Chinese companies have emerged as key infrastructure partners and have already built air and seaports, highways and railroads in the Indian Ocean Island, which is strategically located along East-West trade routes.

The first phase of a €376 million container port next to the main Colombo harbour is due to open next month and bring Sri Lanka on a par with port facilities in Singapore and Dubai.

China Harbour Engineering, a subsidiary of CCCC, will have control over the new Colombo South Harbour for the next 35 years.

CCCC has spread its influence on the other side of hemisphere. It has recently signed a €3.2 million contract for the feasibility study for ports associated with the planned Nicaragua canal proposed by a private Hong Kong based businessman.

The project, to be carried out by a CCCC subsidiary involves a feasibility study, engineering survey, geographical survey, hydrological survey and tidal observation of the port section of Nicaragua canal development project.

A Chinese story?

In June, prime minister Joseph Muscat had revealed that the government is currently engaged with ongoing and wide-ranging negotiations with the Chinese government,

He dispelled criticism on lack of due diligence after MaltaToday revealed that that the same Chinese construction company by the World Bank who are set to carry out a feasibility study on the bridge linking Malta to Gozo was blacklisted by the World Bank.

He argued government could not refuse such an offer because in the dynamics of the bi-lateral relationship with China, and the on-going "wide-ranging" negotiations between the two countries on other projects, it made no sense to refuse the offer "from a country of China's international standing". 

But despite these ongoing discussions with China, the government has excluded State-owned China Power Engineering Consulting Group Corporation from the final list of six bidders for the new gas terminal and power plant, something which should not come at a surprise as the firm lacks experience in the LNG field compared to firms like Daewoo - a leader in the construction of floating regassification and storage plants (FRSU) - and Edison, which operates an offshore LNG plant in Rovigo in Italy.

In the energy field, Chinese investment in Europe has been largely limited to coal-fired plants.

But the Chinese are emerging as leaders in dredging and offshore infrastructure works required for LNG plants.     

In fact, CCCC has recently signed a contract with the Uruguayan government for dredging and construction works related to the development of a liquefied natural gas (LNG) terminal being developed by French gas and power group GDF Suez.