Sunday, January 19, 2014

Chinese dam builders gaining muscle | South Sudan civil war no deterrent to Chinese firms

Chinese dam builders gaining muscle
China Daily, 20 January 2014

Latin America, with its vast array of powerful and beautiful rivers, may be a relatively recent new frontier for Chinese dam builders, but they are coming on strong now, not only providing hydroelectric power and water for irrigation, but also expanding China's geopolitical clout.

International Rivers, a US-based watchdog that monitors dam building worldwide, said that Chinese dam builders have 22 hydropower projects in total in Latin America, with three completed, seven under construction and 12 in the proposal stage.

All of the projects, except for two of the completed ones in Belize - one on the Chalillo River completed in 2005 and funded by the Canadian International Development Agency and the Vaca Hydroelectric Project completed in 2010 - started after 2010, and really gained momentum after 2011.

Both were built by Sinohydro. The third completed dam, on the Mazar Dudas River in Ecuador, was built by the China National Equipment Corp and funded by the China Development Bank.

"It's fair to say that Chinese dam-building companies are targeting the Latin American market," said International River's China program director Grace Mang.

Sinohydro has dams under construction in Costa Rica - the 50 Megawatt Chucas Hydroelectric Project, scheduled for completion in 2013, and in Ecuador with the Coca Codo Sinclair, a 1,500 MW $1.7 billion project bankrolled by China Exim Bank and scheduled for completion in 2015.

Sinohydro also has two controversial projects in Honduras, one near completion - the 55-meter-high 105 MW dam on the Patuca, which IR says is likely to have impact on the Rio Platano World Heritage site, a threatened tropical rainforest biosphere that has already been put on UNESCO's endangered list because of illegal logging, poaching and general lawlessness from the presence of heavy illegal drug trafficking.

IR warns that Sinohydro's other project in Honduras - the 22 MW Aqua Zarca which started construction in 2013 - could displace communities and reduce access to their water and territory.

Chinese dam builders have two other projects under construction in Ecuador, one by China International Water and Electric Corporation and another by Hydro China, totaling 361 MW and combined price tag of $480 million.

Patricia Adams, executive director of Probe International, a Canadian NGO, told the South China Morning Post that China was expanding its dam-building into Latin America partly for geopolitical reasons.

IR's Peter Bosshard agreed. "There is often a bit of geopolitics involved in these projects," he told China Daily. "Obviously, Brazil has a very active dam-building industry as well and is kind of the regional powerhouse. But there are governments that are trying to become a bit more independent from Brazilian influence, so that is where China plays a more active role in Ecuador."

Of the 12 proposed dam projects under discussion, there is one each in Costa Rica, Guyana, Peru and Argentina, two in Honduras, and six in Ecuador, for upwards of $4.5 billion worth of investment.

Bossard explained that around 2003, dam-builders from China, Brazil, India and Thailand, were appearing on the global market and they weren't initially necessarily concerned with following international environmental and humanitarian standards. They had the view that it was up to the host government to set the standards they wanted to apply in their projects.

It was the beginning of a new trend where these new dam builders over the past 10 years who have pretty much taken over the global market. "Nowadays Chinese companies and financiers are the most important actors in the global hydro-power business," he said.

To pursue its mission, IR had to reinvent the way they worked. "We couldn't just go to Chinese actors and tell them what they should or should not be doing," Bosshard said. "But we felt there was a lot of international experience to offer them, so we started to translate a lot of case studies into Chinese.”


South Sudan civil war no deterrent to Chinese firms
South China Morning Post, 20 January 2014
By Toh Han Shih

The conflict has heightened concern but has not stopped billions of dollars of new investment

Hundreds of Chinese nationals and tens of thousands of refugees are fleeing the worsening civil war in South Sudan, yet Chinese companies are still investing billions of dollars in the troubled region.

Since fighting broke out between the government and forces loyal to former South Sudan vice president Riek Machar last December, nearly 80,000 South Sudanese have fled to neighbouring countries, said the United Nations refugee agency.

“Chinese companies, notably CNPC [China National Petroleum Corp], have invested in the country in recent years because of the oil fields there, some of the richest in the continent,” said Lizzie Parsons, the senior China adviser of Global Witness, a British non-governmental organisation (NGO).

“There are certainly risks. The fighting is getting close to the oil regions in South Sudan,” said Robert Kwauk, chief Beijing representative of Blake, Cassels & Graydon, a Canadian law firm.

In late December, the Chinese embassy in South Sudan told reporters 600 to 700 Chinese nationals had been evacuated from South Sudan, while 1,300 Chinese workers remained stationed in that country.

Some Chinese workers have moved from more remote locations in South Sudan to the country’s capital Juba, while skeleton teams are staying on some Chinese project sites to maintain operations.

On Christmas Day last year, 97 Chinese employees of CNPC, the country’s largest state-owned energy firm, arrived in Khartoum, the capital of Sudan, from South Sudan, reported Xinhua.

CNPC’s chief representative in Sudan, Zhao Dong, told Xinhua that CNPC’s oil wells in remote parts of South Sudan have shut down and workers were evacuated from those oil wells.

That news did not seem to deter other Chinese companies from neighbouring Sudan.

On January 9, China Railway Construction Corp (CRCC), a Chinese state-owned rail builder listed in Hong Kong and Shanghai, announced it won a US$1.45 billion contract to build a railway in the eastern part of Sudan.

“The company will closely monitor the security situation and take appropriate measures to protect the security of personnel and assets, and ensure there are no economic losses,” a CRCC spokesman said.

There is a reason for taking on the risk.

“It will be in China’s interest to build infrastructure to transport oil from South Sudan to Sudan,” said Kwauk. Oil production is concentrated mainly in land-locked South Sudan, but the oil needs to be shipped to China through Sudan.

Another firm staying put is Sinohydro, a Chinese state-owned dam-building company which announced on its website on January 3 that it has completed grouting of its dam on the Upper Atbara River. Grouting prevents seepage on a dam.

Sinohydro has built several dams in Sudan, including the US$838 million dam on the Upper Atbara River, according to International Rivers, a US NGO.

“China’s investment into the Sudanese oil sector has rapidly descended into one of its most problematic investments in Africa. The conflict may result in a heightened sense of risk amongst Chinese state-owned enterprises investing in politically unstable parts of Africa,” said Martyn Davies, chief executive of Frontier Advisory, a South African consultancy.

Although the fighting is currently confined to South Sudan, the country of Sudan itself has been a battleground for years.

Clashes occurred between the forces of Sudan and South Sudan along the border in March 2012, according to a report by the International Crisis Group. “Continued instability along the shared border will remain a threat to peace and Chinese interests,” then NGO stated.

Sudan suffered from a nearly uninterrupted civil war from 1955 to 1972 and then from 1983 to 2005.

“To turn a blind eye to the war in South Sudan risks seriously hampering the legitimacy of Chinese companies to operate in the country, which would be a lose-lose situation,” said Harry Verhoeven, convenor of the Oxford University China-Africa Network.

On January 15, China’s Representative to the African Union Xie Xiaoyan reiterated China’s call for a peacefully negotiated solution for the crisis in South Sudan, reported the People’s Daily.

“The conflict is a challenge to China’s long-held policy of non-interference,” said Parsons.

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