Belt and Road: Top 10 projects started in 2017 (2)

FinanceAsia continues its look at what China’s Belt and Road initiative actually brought to the world last year. Today, we look at schemes in Thailand, Angola and Brazil.

China’s trillion-dollar Belt and Road Initiative is hailed as the “project of the century” as the world’s second-largest economy looks to take the lead role in globalisation historically held by the West.

In the second of a three-part series, FinanceAsia takes a look at more of what Belt and Road actually brought to the world at the project level last year, and examines which companies are spearheading and likely benefitting from these projects. For the first part of the report, click here.

These projects are ranked according to their estimated project value.

All of them started construction in 2017, indicating they have gone beyond mere discussions on the paper.

4.   Bangkok-Nakhon Ratchasima Railway Link, Thailand

Companies involved: XCMG, Sany Heavy Industries, Guangxi Liugong Machinery

Estimated Project Value: $5.4 billion

China and Thailand officially kickstarted a long-awaited railway line connecting the two countries in December, a technically difficult infrastructure project that involves drilling through the rugged mountains of Laos and southern China’s Yunnan province.

December marked the launch of the first phase of the project connecting Bangkok and the northeastern Thai province of Nakhon Ratchasima, a 250-kilometre rail line that will serve as the backbone for extension northwards into Louang Namtha in Laos and ultimately to Kunming, capital of Yunnan province.

Due to disputes over financing, construction model, and land rights along the rail line, the plan has been postponed for more than four years since it was proposed.

Meanwhile, Thailand’s junta-led government was criticised for giving a large chunk of the business to Chinese companies, which further slowed the review and vetting process.

Still, the project is likely to benefit Thailand both socially and economically. In particular, it could accelerate the development of less prosperous region in northern Thailand by cutting the travel time to Bangkok from six hours to about 1.5 hours.

The first phase of the project alone will cost an estimated Rmb35.7 billion ($5.4 billion) while the entire line could cost as much as $12 billion, making it one of Thailand’s biggest infrastructure projects in recent years.

Most of China’s Belt and Road projects are led by state-owned enterprises backed by the central government, but the China-Thailand railway is one of the few that involves significant participation from second-tier SOEs at the provincial level.

Suzhou-based machinery manufacturer XCMG, Guangxi Liugong Machinery and Sany Heavy Industry are among the main contractors for the rail line. It is expected to complete in 2021.

5.   Caculo Cabaca Hydropower Project, Angola

Companies involved: China Gezhouba Group, Industrial and Commercial Bank of China (financing)

Estimated project value: $4.5 billion

Angola has long counted China as its main trading partner. Last year, it took the cooperation to a new level by allowing China to build a mega hydropower station that could supply half of its electricity demand when completed.

Located southeast of Luanda, Angola’s capital, the Caculo Cabaca complex will be China’s biggest hydropower project ever in Africa. The project is dubbed Africa’s Three Gorges Dam, referring to once the world’s biggest hydropower station built along China’s Yangtze River.

It is also an important step for the ex-Portuguese colony to rebuild its power network following the bitter civil war that ravaged the country from 1975 to 2002.

China Gezhouba Group, the main contractor for the project, said it would cost about $4.5 billion and will generate 2,200 megawatt of electricity. Construction began in August last year and is expected to complete by 2024.

The Angolan government will finance the bulk of the project through loans from Industrial and Commercial Bank of China.

6.   Power Transmission at Belo Monte Hydropower Project, Brazil 

Companies involved: State Grid Corporation of China

Estimated project value: $2.2 billion

After outbidding homegrown power firm Eletrobras and Spanish conglomerate Abengoa, State Grid Corporation of China started building the second phase of Brazil’s longest power transmission line, connecting the Belo Monte hydropower complex, in September.

China’s state power company was also one of the main contractors of the first phase alongside Eletrobras, implying it will be involved in the entire project line linking the world’s third-largest hydroelectric dam with Brazil’s national grid.

Chinese Premier Li Keqiang and former Brazilian president Dilma Rousseff officiated the groundbreaking ceremony for the first phase in May 2015. 

State Grid said the second phase, which involves building a 2,518-kilometer long ultra-high-voltage transmission line and other auxiliary facilities, costs $2.2 billion and will complete by 2020.

It will create an estimated 16,000 jobs and generate BRL2.2 billion ($680 million) in tax income for the Brazilian government during the contract period.

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