China Communications may secure bridge deal
Toh Han Shih
China Communications Construction has a high chance of winning a substantial share of the project to build the Hong Kong-Macau-Zhuhai Bridge, which is worth more than 70 billion yuan (HK$79.4 billion), analysts say.
Construction of the three-way bridge was scheduled to begin by the end of this year, so the contract would be awarded in the latter part of this year, said Meng Fengchao, a vice-chairman of the infrastructure construction firm. 'We hope to get a piece of the action.'
Shortly before the firm signed a contract to design the bridge last month, Premier Wen Jiabao announced that construction must begin by the end of the year, said Mr Meng. 'So we changed our plans. Our burden will be large.'
China Communications led the consortium that won the 200 million yuan design contract. Another consortium which included China Railway Group, a rail construction firm, lost the bid, said Macquarie analyst Anderson Chow.
'The fact that China Communications is doing the design gives it a very strong competitive advantage in winning the construction contract,' said Mr Chow.
China Communications was expected to win the contract to build the bridge portion of the project, which is worth about 40 billion yuan, due to its track record in building bridges, including the 36-kilometre Hangzhou Bay Bridge, the world's longest sea-crossing bridge, he said.
'This is a challenging project, and only the most experienced companies will be selected. So China Communications will be a leading candidate,' said Daiwa Institute analyst Geoffrey Cheng.
The project involves a 28km three-way bridge, a 6.7km undersea tunnel in the middle and two artificial islands, which must be dredged.
Because China Communications is one of the world's largest dredging firms, it stands a good chance of participating in this project, according to a source.
Owing to the global economic crisis, the firm's capital expenditure would drop to about 10 billion yuan this year from 17.55 billion yuan last year, said chairman Zhou Jichang.
Despite the crisis, China Communications chief economist Liu Wensheng was confident that the overseas portion of the firm's revenue would rise to 25 per cent this year.
Last year, its turnover was 178.89 billion yuan, of which about 20 per cent came from overseas, largely Africa, said Mr Liu.
However, Phillip Securities analyst Carmen Wong believes the overseas portion of China Communications' revenue will shrink this year due to the global financial crisis.