A project worth 200 million euros in the hands of a dubious Chinese company

A project worth 200 million euros in the hands of a dubious Chinese company

According to the announcement of February 21, 2022, the implementation of the tunnel connecting the municipalities of Pale and East Sarajevo was supposed to begin this spring. On February 21, as Inforadar reported more than a year ago, the mayor of East Sarajevo, Ljubiša Ćosić, signed a memorandum of cooperation in the Sarajevo representative office of the Chinese company Sinohydro, which operates as part of the Power China group, related to the construction of a tunnel that would connect municipalities in East Sarajevo Sarajevo. The tunneling through Trebević was conceived as a multi-year project that should connect East Sarajevo and Pale by traffic.

PHOTO: Information

Inforadar

The length of the tunnel would be eight kilometers on average and it would follow a part of the old railway, and it would go through Trebević, which would bring the two municipalities closer from the current 40 minutes to only 12-13 minutes’ drive. According to the mayor of East Sarajevo, the realization of the project would cost around 200 million euros. Just a year before, that sum amounted to 150 million to 200 million KM.

For Inforadar Ćosić pointed out that this idea is not new, and that his administration only reactivated it.

During the year 2022, there were some difficulties regarding the tender announcement, and we announced it and selected a contractor who did a rough preliminary study. It’s a company Radish which gave us approximate information about possible routes. After that, we agreed with the Chinese partner to create a wider feasibility study and it is ongoing. A company from Sarajevo is working on the order of “Sinohydra”. According to the Memorandum, we as the City Administration are not involved”

FOTO: LJUBIŠA ĆOSIĆ

Ćosić stated that this preliminary study will show which of the three proposed solutions will lead to a conceptual solution based on which a tender would be announced to select a strategic partner.

It is a very serious investment. On the three proposed routes, the length of the tunnel would be between 5.5 km to 9 km with another proposed tunnel of 500 m to 1.5 km with certain bridges and part of connecting roads. The exit and entry points would be different. One of the entry points would be in the Miljevići settlement, here in East Sarajevo, right next to the entity border. The second would be in the Toplik-Tilava settlement in East Sarajevo, and the exit points would be at Pale itself or above Pale on the road to Pema Jahorini. It is precisely the pre-feasibility study that should answer which is the best option for creating a conceptual solution“, Ljubiša Ćosić pointed out for our portal.

So, everything is well thought out, however, at the start, suspicions arise that point to possible irregularities and corruption.

It is known that “Sinohydro” is a company with a bad reputation in the world. As we wrote, the African Development Bank (AfDB) put this company on the “black list” and banned them from participating in all projects financed by the African Bank.

The company was involved in a number of dubious projects in Zambia, Kenya, Zimbabwe and other African countries, where “Sinohydro” received jobs worth 533 million dollars.

It was subsequently found that the value of the tender was artificially increased twice in Uganda, where “Sinohydro” ignored the project’s requirements in road construction. The Bank of Africa’s anti-corruption office stated in its report that the contracts in question are illegal and that they are proof of the corrupt links between this company and the political powers there.

Years ago, the governments of several countries and representatives of organizations accused this company of corruption, cheating, misappropriation of budget funds, low-quality construction works, dishonest partnership and others, which was stated in the reports of this Office for Corruption.

The mayor of East Sarajevo, Ljubiša Ćosić, believes that it is a “really powerful Chinese group that operates in various economic fields and employs around 300 thousand people at the level of the group”.

For Inforadar, he gave an example of their involvement in the construction of HPP Ulog in the municipality of Kalinovik, 39 MW of installed power, which according to his estimation should be completed by the end of this year, said Ćosić.

Foto: Ljubiša Ćosić

The company “Sinohydro” tried to impose its influence in several projects throughout Bosnia and Herzegovina. It is more present in the territory of RS. We remind you that a little more than a year ago, the deadline that the Government of the RS gave to the consortium that was supposed to build the Ulog hydroelectric plant on the upper course of the Neretva expired 11 years ago..

It is the EFT group of Vuk Hamović, whose consortium was joined by the Chinese “Sinohydro”. The construction contract with the concessionaire Hamović was signed in 2012. The work never started, so Ljubiša Čosić’s claim that the works could be finished by the end of the year remains unclear.

PHOTO: ĆOSIĆ WITH CHINESE COMPANY REPRESENTATIVES

“Synohidro” offered to build the Banjaluka-Mliništa highway 8 years ago. They even submitted a Feasibility Study, which was necessary for the start of loan negotiations, but their proposal was rejected by the Council Minister of Bosnia and Herzegovina. Also, they had no luck in building a new one either Doboj Hospital where they lost the tender.

They also appeared at the competition for the construction of HPP “Dabar”. This business is estimated to be worth 430 million KM. The implementation has not been finalized due to the court proceedings of potential contractors, but according to our knowledge, the epilogue of this case will come soon. “Sinohydro” is also involved in the work on the construction of the Počitelj bridge. This deal is worth over 28 million euros.

Our final goal is, if the project is judged to be profitable and feasible, to form a joint venture with the Government of the RS. That company would completely transparently announce a public call for the selection of a strategic partner who would be able to provide funding sources and offer a guarantee to those funding sources. On the other hand, the Government of the RS, and I managed to agree this with the authorities in the RS as the mayor, would give a guarantee that the strategic partner would be compensated for a part if it could not be provided as a whole by charging“, Ćosić pointed out for Inforadar.

Looking at the list of companies and individuals with temporary and permanent bans on projects financed by the World Bank around the world, it is noticeable that a Chinese company has been repeatedly banned. Also, it is noticeable that they often change their name, for example to “Sino Hydro” or “Sino technology” and the like, and that they often joined a holding company and in that way committed fraud.

We already wrote that for our portal, Transparency International in Bosnia and Herzegovina confirmed that their national branch of Transparency International, which works in Malaysia, characterized the project to build a large dam on the Bakun River in Sarawak in this country as a monument to corruption.

The works on the construction of the dam were entrusted to the company “Sinohydro”, and this company even publicly admitted that the works were carried out negligently. Many officials and workers warned that during construction, too much water was added to the cement in order to reduce costs and speed up production, which ultimately weakened the structure of this largest dam in the country, which, by the way, is located in an earthquake-prone zone.“, they once told us from Transparency International BiH.

To our question whether the Chinese partner is still in circulation, Ćosić answered:

With the signed memorandum, we have the obligation to obtain the documentation. This memorandum is not binding for the selection of a strategic partner. There are clear rules in the Fidic Yellow Book, in the Law on Public Procurement of BiH that precisely describes the choice of a strategic partner, a potential contractor. So, nothing is predetermined. I must say that so far the Chinese partners “Sinohydro” and “Power China” have respected everything. They show their seriousness in other projects in which they are involved in the RS and also in the Federation of Bosnia and Herzegovina. However, this does not mean that they will remain as strategic partners. I had the opportunity to meet with the head of the European Investment Bank and we mentioned this project and said why it is not possible to connect contractors with potential financiers. We know that in BiH the Chinese are already working on some projects financed by European banks”.

A Chinese company at the address where the Tax Administration of the RS is headquartered, and where it is impossible to enter without notice (Photo: Siniša Pašalić)

PHOTO: ADDRESS AT TRGU RS

Let’s also say that the address of the company “Sinohydro” is registered in the building of the Tax Administration of the RS in Trg Republike Srpske Street at number 8/XII. You cannot enter this building without an announcement, and the only possible contact of “Sinohydra” that is public is the one in the photo above, without an e-mail address and contact phone number.

The previous address was in the Nova Varoš neighborhood of Banja Luka, in Svetozar Markovića Street at number 5. At that address, as of 2020, the Chinese company “Sinohydro Corporation Limited” represented by Liu Zhidong from Beijing, which literally has absolute power in concluding a contract.

PHOTO: Address in ul. Svetozar Marković

All this indicates that the main partner in the specific business is precisely the political top of the RS, where there is a suspicion that individuals have already “embedded themselves” because, as we said, it is a company that is on the blacklists of the World Bank and the African Development Bank due to corruption, fraud and bribery of politicians around the world.

“Synohiydro” is favored by the domestic partner and the work has already been started without transparency of the spending of money and details of public procurement tenders during the preparation of the initial study.

The president of the RS and the president of the SNSD, Milorad Dodik, got involved in everything, declaring last year that it is “one of the biggest investments in the city, which we will start already next year”.

Milorad Dodik added: “The construction of a tunnel through which it will take less than ten minutes to go from Lukavica to Pale, through Trebević, would also shorten the route from the south of Republika Srpska to Serbia.”

PHOTO: ĆOSIĆ AND DODIK

This statement disappeared with last year’s snow because there is still nothing to do. This spring, Dodik and Ćosić took a picture again and announced this project, regardless of the aforementioned analysis of the Office for the Fight against Corruption, which stated in its report that “Sinohydro’s” illegal contracts are in question and that they are proof of the corrupt links between this company and the local political powers. .

“What is important to me as the mayor is that we get the project documentation, that the feasibility study says how much it costs and whether this project is profitable. When we know that, we will present the project to the public, the Government of the RS and come to the stage of making a decision on the formation or non-formation of a joint enterprise. This is how it is done in the region. We had an agreement with IPSA from Sarajevo, and I’m sorry that we were a little late. But this company from Sarajevo, which we hired for the Feasibility Study, is a reference and has all the references, and I think everything will be fine,” said Ćosić.

Certainly, at a time when this entity is experiencing a serious financial crisis, since the construction of the tunnel, there is nothing. From time to time, this story becomes a political mantra, but the Chinese company is a constant. We spoke with the mayor of East Sarajevo on the day when the Republika Srpska entity held two bond auctions with which it secured 75 million KM to cover the budget for this year. Meanwhile, the Chinese company is “working”.

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