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China's Libyan projects on hold indefinitely

By Yan Pei: 0 Comments Print E-mail China.org.cn, March 21, 2011

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Chinese nationals arrive at Beijing Capital International Airport in Beijing, China, Feb. 27, 2011. Over 320 Chinese nationals evacuated from Libya to the Greek island of Crete flied back home on Sunday. [Xinhua]

Chinese companies' Libyan projects won't return to normal operations in the short term, especially after Western air strikes last Friday, China Business News reported Monday.

Judging from the current situation, it's very difficult for our operations to go back to normal any time soon," said a senior executive with Metallurgical Corporation of China (MCC).

MCC has two engineering and construction projects in Libya through its subsidiary China First Metallurgical Group. One contract is an EPC project to build 5,000 homes and auxiliary facilities in East Melita, while the other is a 4x3000t/d cement factory production line in Misratah.

The two projects, valued 5.586 billion yuan, still have 5.131 billion yuan in outstanding value. According to China Business News, MCC's two projects have the largest outstanding value among all Chinese companies operating in Libya.

When asked whether MCC's projects have full coverage insurance policies, the executive avoided a direct reply but said everything was done by the book.

China Gezhouba Group Co., Ltd. (CGGC) has also suspended its 5.54-billion-yuan project in Libya, which was slated to build 7,300 houses, but has only completed 16.8 percent of its total contract work as of February 18.

"Our Libyan project is not in the air-attack area for now," said Shi Jiaming, deputy director of the department of corporate culture of China Gezhouba Group Corporation, the parent of CGGC. "Besides, we have full coverage insurance on the project, and China Export & Credit Insurance Corporation (Sinosure) has paid out the losses that can be determined at the moment," he added. As for additional losses, Sinosure will also pay if losses qualify for coverage.

China Railway Construction Corp. Ltd. (CRCC) also has Sinosure as its insurer. "We have a full insurance policy, so the air attack on Libya will not incur new losses for us," said the company's board secretary Yu Xingxi.

CRCC has three projects in Libya with a contract value of US$4.237 billion. Only US$686 million of the contract had been completed before the turmoil began.

According to the State-owned Assets Supervision and Administration Commission (SASAC), 13 centrally-controlled state-owned enterprises have operations in Libya and all of them are covered by Sinosure.

By March 18, CGCC and China Railway Construction Corporation Limited had received 162 and 48.15 million yuan in payments from Sinosure.

China's business press carried the story above on Monday. China.org.cn has not checked the stories and does not vouch for their accuracy.