China’s largest engineering firm, China Communications Construction Company (CCCC), says it is firmly on track with its railway project in Malaysia and is also stepping up construction of a Sri Lankan port city development that had been suspended for a year.
In a written response to questions posed by the South China Morning Post (SCMP), CCCC president Chen Fenjian told the daily the US$1.4 billion Colombo Port City was being built “in an accelerated pace”, after the project was initially put on hold by the country’s new government between 2015-16.
SCMP said according to CCCC sources, the Colombo Port City project, which will reclaim some 2.7 square kilometres of land, on which will sit flats, offices, shopping centres, hotels and exhibition centres, is expected to be completed by 2030.
The railway project in Malaysia and the Colombo Port City project are located in key nodes of China’s Belt and Road Initiative.
However, both projects have been mired in controversy.
The new Sri Lankan administration suspended the port city project for a year while it re-examined most accords that had been signed by the previous administration. CCCC had complained of hefty losses because of the work stoppage.
As a result of the port city project and other infrastructure schemes, Sri Lanka owes US$8 billion of debt to China.
Although 70% of the Colombo development has been funded by China Development Bank, a state policy bank – a common arrangement for China’s Belt and Road infrastructure projects – it has been accused of lax environmental and social impact scrutiny compared to institutions such as the World Bank.
The Malaysian railway project has also sparked similar concerns, as some worry it may lead to habitat loss and fragmentation in the peninsula’s forested heart.
Chen said CCCC in general attaches great importance to “ecological impact”. He cited the example of the Nairobi-Mombasa railway line in Kenya, saying that CCCC built more than 100 tunnels to allow wild animals to pass.
For the Colombo project, he said the company was dredging sand 5km off the coast to avoid disruption to fishing areas.
He also defended the way the projects have been financed, saying Chinese banks’ lending is reliable in terms of size, price and maturity, and come with no strings attached.
Aex Zhu, power and utilities market segment leader at consultants E&Y, said China’s engineering firms have largely succeeded under the “engineering, procurement, and construction” contracts, in which contractors just have to ensure on-time delivery.
However, he said, increasingly they are being asked to operate projects for a while before handing over, or take a stake in these projects.
“Such model involved more time and more operational risks. Chinese firms increasingly have to accept it,” said Zhu.
Both the Malaysia and Sri Lanka projects involve a period of operation.