Skip to main contentSkip to navigationSkip to navigation
Swansea Bay
Swansea Bay, where a £1bn tidal lagoon is supposed to bring green energy to more than 150,000 households. Photograph: Geof Slocombe/Alamy
Swansea Bay, where a £1bn tidal lagoon is supposed to bring green energy to more than 150,000 households. Photograph: Geof Slocombe/Alamy

Swansea Bay tidal lagoon: doubts cast on engineering contract with China

This article is more than 8 years old

Lawyers are looking into awarding of £300m sea wall project to China Harbour Engineering Company after complaint from Belgian contractor

A £300m contract with a Chinese company to build a sea wall for a flagship renewable energy project at Swansea Bay has been called into question amid allegations that it may have been awarded improperly. Lawyers for the tidal lagoon scheme’s promoter are reviewing a challenge understood to have come from Belgian contractors who were shortlisted but lost out to China Harbour Engineering Company, an arm of China Communications Construction Company (CCCC). The Department of Energy and Climate Change (DECC) confirmed on Sunday that it was aware of claims about the agreement.

The energy secretary, Amber Rudd, gave permission last week for the £1bn project to provide power for 150,000 homes, in what the government hopes will be the first of a string of such projects around the coastline.

The nature of the complaint is not known, but it is believed to allege anti-competitive behaviour around the letting of the contract. To make the issue more complicated, critics have pointed out that CCCC is on a list of companies banned from obtaining certain kinds of contract from the World Bank.

The agreement to build a sea wall in South Wales was signed last week just days before Rudd gave planning permission for the scheme, which is led by renewable energy entrepreneur, Mark Shorrock.Shorrock’s company, Tidal Lagoon Swansea Bay, said it could not comment, but sources said lawyers at the firm were now handling the issue.

A spokeswoman from the DECC said:”We are aware of these allegations. However, this is a completely separate matter to the planning decision. As such, this does not impinge on the government’s decision to grant planning consent for the Swansea Bay Tidal Lagoon project.”

Industry experts in Brussels said they understood that Belgium’s foreign and deputy prime minister, Didier Reynders, had been in contact with the British Foreign Office, which had passed on his concerns to the DECC. The Belgian foreign ministry declined to comment.

There is a dedicated procedure for allegations of this kind to the European commission and then for Brussels to raise any objections with the UK. The £300m contract will ultimately be paid for through customer bills.

The Swansea Bay project will only go ahead if the government provides the developers with subsidies through the “contract for difference” scheme. This should be decided later this year.

China Engineering Harbour Company has made clear in earlier public statements that it is not covered by the sanctions imposed by the World Bank in July 2011 and which run until 2017. CCCC became barred from bidding for road or bridge contracts funded by the World Bank due to a problem dating back to 2002 relating to China Road and Bridge Corporation (CRBC) in the Philippines. CCCC did not take over CRBC until 2005.

“CHEC is not involved in and has never been involved in any activity that has attracted any sanctions by the World Bank. CHEC has never been under any inverstigation by the World Bank,” it said in a statement in 2012.

The £1bn Swansea Bay project will see green power delivered to more than 150,000 homes. The next step for the project is the obtainment of a marine licence from the Welsh government.

  • This article was amended on 17 June 2015. An earlier version referred to “the government’s flagship renewable energy project at Swansea Bay”. To clarify, while the government has publicly expressed support for this project and will decide what level of subsidy should be offered, it was initiated by and will be built by the private sector, with the costs ultimately borne by the consumer.

Most viewed

Most viewed