British firms face loss of contracts as aid runs out
FOUR projects in China are among work worth about $1 billion which has been lost by British contractors after the British Government halted further concessionary financing for projects in Asia.
The aid moratorium has derailed Britain's hopes of winning further substantial orders which rely heavily on favourable funding until the start of the new financial year in April.
The mainland deals include a water treatment scheme in Tangshan, south-east of Beijing, and a similar water improvement and sewage disposal project on Hainan Island.
The problems arose at the end of last year when Kvaerner Cleveland Bridge won a GBP100 million (about HK$1.26 billion) contract to build the Jiangyin bridge across the Yangtze River.
The project included GBP55 million of British Government aid - a mix of grants and loans made available under the Department of Trade and Industry's Aid and Trade Provision (ATP).
The size of the aid package meant there was nothing left to support other projects in China or elsewhere in Asia. Southeast Asia is one of Britain's main targets in terms of export and trade promotion.
Officially the department and the Overseas Development Administration (ODA), which oversees Britain's budget, are carrying out an internal review to see if further cash can be found before the new financial year starts in April.
But contractors doubt whether any extra cash can be found that quickly. Firms including Biwater and Balfour Beatty fear hopes of going ahead with the schemes have been torpedoed indefinitely.
Alan Smith, Biwater's area manager in Hong Kong, said two water schemes in China had been lost and two other water projects in Asia had been scrapped.
Mr Smith has spent more than a year chasing the Tangshan sewage treatment works, effort which he now considers wasted.
'It is a big disappointment, to put it mildly,' he said. 'We have spent quite a lot of money [pursuing these projects].' The projects were identified under a joint British-Chinese government initiative and were to be financed under the fourth concessionary finance agreement.
Mr Smith said both governments would have to agree a fifth financing protocol before the schemes could go ahead.
A GBP25 million bridge project being negotiated by Balfour Beatty in the Philippines could also face the axe.
But the cash crisis did not stop British Prime Minister John Major or Board of Trade president Ian Lang trying to drum up further business opportunities during a recent six-day visit to India, Pakistan and Bangladesh.
Ironically, all three countries are covered by the ODA moratorium, so even if Mr Major and Mr Lang were successful, the projects could not go ahead because there is no money left in the aid budget to support them.
Balfour Beatty international business development director Ian Thomas, who was part of the trade mission led by the prime minister, planned to discuss the cash freeze with Mr Lang during the trip.
'We are lobbying like mad,' he said.
