Libya Lost Or Exceeded Expectations

In from

In March 25th, the reporter learned from an insider in Gezhouba Dam group that in the afternoon, Sahara Bank of Libya issued a letter of "advance payment letter of guarantee" to some Chinese enterprises, and the claims amount for each enterprise amounted to several hundred million yuan.

"After the withdrawal of overseas Chinese, what we are most worried about is this matter, which is worse for enterprises."

Beijing Fujian Hong Kong Industrial Group (hereinafter referred to as "Hong Fujian") deputy general manager of the International Engineering Department Liao Liying told reporters.

In March 22nd,

According to statistics from the Ministry of Commerce, there are a total of 50 large projects under construction in Libya, involving a total sum of $18 billion 800 million.

At present, the Ministry of Commerce has not yet finished the assessment of the loss of overseas assets by Chinese enterprises in Libya, but the collection and collation of Assets Preservation data of most enterprises has been basically completed.

The more you work, the greater the loss.

According to the SASAC statistics, the investment of Chinese enterprises in Libya is mainly concentrated in the field of infrastructure.

Liao Liying told reporters that the greater the amount of damage, the greater the loss, for the infrastructure contractor going to Libya.

That is to say, the larger the contract amount is, the smaller the economic loss will be.

Generally speaking, the payment method of project contract funds is to pay according to the progress of the project, plus 15% of the advance payment.

Liao Liying told reporters that most contractors can get 15% advance payments, and some enterprises pay more in advance; while owners pay for progress payments, they generally need 60 to 90 days of audit.

Take Fujian for example, when it withdrew from Libya, it completed 36% of the total project. Libya has already paid 15% advance payments and 15% progress funds, totaling about 1 billion yuan, and 660 million yuan of accounts receivable has not been recovered.

The so-called "advance payment" means that before the project starts, the owner will pay the Contractor's engineering materials in advance according to a certain proportion of the total cost of the project, which is mainly used to purchase materials and equipment needed for the project.

A project contractor told our reporter that although the enterprise can get some advance payment, the advance payment is usually deducted from the project progress payment according to the progress of the project every month, plus the progress payment will normally be delayed for 3 months or even half a year. Once the project is stopped due to uncontrollable factors, the contractor will lose more quickly.

"If the construction progress is less than the proportion of the advance payment, it may temporarily cover the loss part."

Liao Liying said.

A person familiar with the matter told reporters that in the Chinese enterprises contracted for capital construction projects in Libya, the construction progress of the three companies, namely, Hong Fujian, Beijing construction, and Chinese construction companies, was the fastest, exceeding 30%.

Among them, China's construction projects are currently government nationals housing projects, the scale of the project is 20 thousand sets, the total amount of the contract is about 17 billion 600 million yuan, the construction period is 40 months, and the project has completed nearly 50% of the project.

China railway construction is one of the largest investment enterprises in Libya, with a total investment of US $4 billion 237 million.

Before the evacuation, the progress of China railway construction project has exceeded 15%, and the total amount has reached US $684 million.

It is understood that most of the contracts for Chinese enterprises in Libya have already started: in the total amount of $18 billion 800 million, the contract amount of $11 billion was signed before 2008 and 2008, and the amount signed in 2010 and 2009 was about 7 billion 700 million dollars.

At present, the loss of Chinese enterprises in Libya is mainly concentrated in three aspects: first, the loss of fixed assets and raw materials; the two is the loss of accounts receivable which has not been recovered; and the three is the cost arising from the withdrawal of personnel.

{page_break}

Malicious claims

However, Chinese enterprises have already received the "advance payment" of the owners of Libya.

In March 25th, the reporter learned from an insider of the Gezhouba Dam group that Sahara Bank of Libya had made claims against the advance payment bond to Gezhouba Dam group, China Water Conservancy and hydropower construction group company, Hong Fujian and other companies, and must reply to the bank within five days.

These people told reporters that the advance payment guarantee is still half a year before maturity, and now the bank claims in advance, which is a malicious claim.

The so-called "advance payment guarantee" is a guarantee issued by the contractor to the owner through the bank to pay the owner's advance payment according to the regulations.

According to the provisions of the guarantee, if the Chinese contractor fails to fulfill the contract, it will not refund the advance payment paid by the owner, the bank will refund the advance payment to the owner and claim the principal and interest of the prepayment to the contractor.

The above Gezhouba Dam people said that Sahara Bank of Libya offered two options, one is to compensate the principal and interest of the advance payment, the two is to extend the prepayment guarantee period to December 31, 2012.

"The two option is bad for us. Choosing compensation will further increase the loss, and not a small amount. If the guarantee is postponed, our risk and guarantee cost will be increased for another year."

Liao Liying told reporters that the Sahara Bank of Libya claims about 400 million yuan to the macro Fujian workers.

The Gezhouba Dam people refused to disclose the specific claim amount to our reporter, saying only that "the amount of compensation in Gezhouba Dam is the highest among claims enterprises."

The person disclosed that the company has sought help from the Ministry of Commerce, hoping that the Libya bank will suspend the advance payment guarantee.

However, even if banks stop making claims to Chinese enterprises, the credit record of Chinese enterprises overseas investment may be smeared.

"This is a very urgent matter, and we have to make a decision within five days.

We hope that the Ministry of Commerce will help us suspend the guarantee, while ensuring the credit rating of the enterprises, otherwise, it will cause potential adverse effects on the overseas business of the company. "

The Gezhouba Dam people said.

Risk of fermentation

In addition to the loss of assets, the relocation of more than 30 thousand workers withdrawn from Libya and the increase in bad debts are also a major problem for Chinese enterprises.

The reporter learned from the Beijing construction industry group that at present, most of the workers who were withdrawn from Beijing by construction workers in Libya are at rest, while a few management departments are placed in the domestic departments of the company.

Liao Liying also confessed that the resettlement of more than 2000 workers withdrawn from Libya was difficult to solve. "Only the completion of the money let you go back to rest for the time being."

In addition, due to the lack of building materials in Libya, which is unable to meet the engineering needs, contractors are generally required to purchase from countries other than Libya.

The construction materials required by Chinese enterprises to contract projects are generally purchased from the mainland.

Therefore, after the interruption of the Libya project, some enterprises failed to pay the upstream raw material suppliers on schedule, and many projects used subcontracting mode, which also led to the problem of triangle debts.

In March 24th, Liao Liying told reporters that the company had lost more than 1 billion 100 million yuan in David Villa, and there was no way to recover the loss. It could only hope for the government.

Of course, the damaged Chinese enterprises have also received some compensation from the insurance companies.

Recently, the China Export and Credit Insurance Corp (hereinafter referred to as CITIC insurance) paid 162 million yuan or 48 million 150 thousand yuan to the Gezhouba Dam and China building materials import and Export Corporation respectively.

This is the first insurance policy payment made by CITIC for the contracted project company in Libya.