According to the Resolution of the President of the Republic of Uzbekistan (from 09.09.2016 № ПҚ-2583), reconstruction project of 228-315 km (87 km) of A-380 “Guzor-Bukhara-Nukus-Beyneu” highway in Bukhara region is developed. The total cost of the project is 230 million dollars: 150 million dollars from ADB credit, 80 million dollars from Government of the Republic of Uzbekistan.
According to the results of the tender for this project, held in August 2019, the Azerbaijani company “Evrascon” with 93.2 million dollars offer has been chosen and appealed to the ADB to approve the contract with the relevant ministries and agencies of the Republic of Uzbekistan.
However, the ADB canceled the tender for no reason and demanded that the project be handed over the China Railway 20 Bureau Group Corporation. The international tender process and bids were cancelled.
Why the project was awarded to CR20BGC without a tender?
Here we will focus on the management system of Chinese construction companies. It’s controlled by the State-Owned Assets Supervision and Administration Commission of the State Council of China (SASAC).
SASAC has 97 companies. The main task of the committee is to control the state share in the parent companies, to protect the interest of investors in the state share in the companies. SASAC also ensures the participation and victory of its companies in international tenders. According to SASAC, it involves several companies in the render at the same time, prepares business projects for them, organizes a dumping policy in the tender for competing companies.
Above-mentioned CR20BGC is a subsidiary of China Railway Construction Corporation LTD and this parent company is controlled by SASAC. Also, the bulk of ADB’s charter capital belongs to the China, which can influence the acquisition of projects on the basis of this bank loan.
Therefore, under the influence of the China, ADB demanded that the project for the reconstruction of 228-315 km of the A-380 highway in Bukhara region be handed over to SASAC’s CR20BGC.
The main purpose of the Chinese intrusion is to penetrate and influence the sectors of the Uzbek economy through construction companies, to cause economic damage, misappropriation of investment funds, and further geopolitical and economic dependence.
In this regard, we analyze the interest of Chinese construction companies in the economy of Uzbekistan. In particular, according to the results of the tender for investment projects in Uzbekistan, the following indicators are observed for the participation of foreign and domestic companies:
Number and percentage of companies that received projects in 2009-2018:
- Chinese companies 1-3, (10-20%);
- South Korean companies 1-3, (10-20%);
- European companies 1-3, (10-20%);
- CIS companies 1-3, (10-20%);
- Local companies 1-3, (10-20%).
Number and percentage of companies that received projects in 2018-2019:
- Chinese companies 10-15, (25-50%);
- South Korean companies 1, (2%);
- European companies 1, (2%);
- CIS companies 2-4, (4-7%);
- Turkish companies 2-4, (4-7%);
- Local companies 1-3, (10-20%);
- Other countries companies 1, (2%).
Number and percentage of companies that received projects in 2020:
- Chinese companies 20-40, (30-66%);
- CIS companies 3-6, (5-10%);
- Turkish companies 3-6, (5-10%);
- Local companies 3-6, (5-10%);
- Other countries companies 2, (4%).
According to the data analysis, the number of Chinese companies implementing projects in Uzbekistan has increased 15 times and the number of local companies has doubled over the past 11 years. During this time, more than 50 Chinese companies have visited Uzbekistan to implement projects. These companies have implemented projects such as road construction, water management, hydraulic engineering.
In addition, Chinese construction companies are making a number of serious mistakes in the implementation of international projects. In particular, the World Bank sanctioned China Railway Construction Corporation LTD for not participating in tenders due to non-compliance with the requirements set by its subsidiaries in previous years and fraud in the conclusion of contracts.
What were the promises of CR20BGC?
CR20BGC has agreed to meet all the requirements of Uzbekistan in order to achieve the project of reconstruction of 228-315 km of the highway A-380 "Guzor-Bukhara-Nukus-Beyneu" in Bukhara region, promising to complete the construction work in a timely and quality manner. The company also said that the spread of coronavirus infection will not hinder their activities, and will send specialists and workers, special equipment to Uzbekistan under a contract. Thus, at the initiative of the ADB between the Committee for Roads of the Ministry of Transport of the Republic of Uzbekistan and the company CR20BGC in May this year 99.811 mln. doll. agreement has been reached. According to the agreement, the stage of the project, specialists and workers, transportation of special equipment from the PRC, procurement of construction materials, involvement of auxiliary enterprises, the procedure for hiring local citizens and other organizational issues have been agreed.
Post-contract games!
CR20BGC is scheduled to implement mobilization and demobilization phases in June-September this year according to the project implementation schedule. According to him, the company plans to bring special equipment and specialists to Uzbekistan, to start earthworks.
However, the company did not do any work in May-July, transferring the advance share of the funds specified in the contract to the Highway Committee, and then under the pretext of starting work. After that, on July 20, Uzbekistan provided CR20BGC with 15 million dollars in accordance with the contract. However, CR20BGC's July 21 appeal to the Highway Committee indicated that the project did not intend to be implemented.
In particular, company officials appealed to delay the start of construction work on unfound pretexts, such as:
- Statistics of coronavirus pandemic in Uzbekistan are growing day by day;
- Bukhara region is a red zone and the movement of vehicles involved in construction is limited;
- due to the suspension of international flights, there were problems in bringing the company's specialists from the PRC;
- the problem of importing special construction equipment to Uzbekistan;
- Rising prices for construction materials in Uzbekistan. In particular, 1 ton of cement cost 700,000 soums in May and 1 million soums in June;
- the lack of applicants for the employment of local workers in Uzbekistan, the suspension of public transport, canteens and other consumer services in their employment.
In fact,
- During the coronavirus pandemic in Uzbekistan, opportunities for construction work and appropriate permits have been identified;
- Issuance of special sticker permits by government agencies for the movement of vehicles involved in construction work during quarantine;
- there is an opportunity to organize charter flights by “Uzbekistan airways” to bring the company's specialists from the PRC;
- In accordance with the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan No. 322 from 23.05.2020, foreign companies implementing projects in the investment program are provided with customs benefits for the import of special equipment to Uzbekistan.
- The increase in the price of construction materials is not specified in the terms of the contract;
- There are enough specialists in the field of construction among the local population of the Republic of Uzbekistan, and the territorial departments of the Ministry of Employment and Labor Relations can assist in organizational work.
- The Ministry of Health of the Republic of Uzbekistan and its regional departments have organized organizational work to prevent and treat the spread of coronavirus infection.
The power tools of project has not yet reached Uzbekistan?!
According to construction sources, the project will require 300-400 specialists and workers, 170 special equipment.
However, the company has not yet organized the issue of bringing visiting specialists and workers from China to Uzbekistan. In particular, the company has not applied to the Committee for Automobile Roads to obtain a visa to visit Uzbekistan for Chinese citizens.
Also, the number and type of special equipment involved in the construction work by the company was not provided to the Committee for Automobile Roads.
How to do construction without specialists and workers, special techniques?
About the construction of the Buston water canal by CR20BGC.
CR20BGC is also a contractor in the Buston Canal Reconstruction Project in the Republic of Karakalpakstan with a loan from the International Development Association and the World Bank, and has signed a $ 40 million contract to rehabilitate 35 km of the canal in 2019-2021. The company is also delaying the construction of this facility, and to date has completed only 10 km of reconstruction work.
In addition, CR20BGC is working on a project to reconstruct the Buston canal in the Republic of Karakalpakstan, where 70 Chinese citizens are working, but they have not been issued a В-2 visa to work in Uzbekistan. On what visa basis and for what purpose did these Chinese citizens visit?
Result of analyzes.
Although the Uzbek-Chinese diplomatic relations have been expanding in recent years, trade and economic ties are developing, the problems and hidden goals in some areas of cooperation are noted.
In particular, the inaction of CR20BGC and the slow approach to projects cause damage to the budget of Uzbekistan, delays in the implementation of government programs, inefficient use of funds of international financial institutions.
Also, as noted above, CR20BGC's goal is to penetrate and influence the Chinese economy in Uzbekistan, causing economic damage, misappropriation of investment funds, and further geopolitical and economic dependence.
The Ministry of Transport, the Ministry of Foreign Affairs and other relevant agencies of the Republic of Uzbekistan are ignoring the above-mentioned problems.
Conclusion.
CR20BGC must complete the project for the reconstruction of 228-315 km of the highway A-380 "Guzor-Bukhara-Nukus-Beyneu" in a timely manner or abandon the project in accordance with the terms of the contract, return the $ 15 million transferred in advance.