[Haichuan Chemical Salary News] BOO agreement signed for Guizhou Yufu Energy’s coal-to-oil project with a cost of 18.3 billion yuan and an annual production capacity of 2 million tons
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The BOO contract for Guizhou Yufu Energy Co., Ltd.’s project to produce 2 million tons of coal-to-oil per year involves five major units with a total cost of 18.3 billion yuan. Of this amount, China Aerospace Changzheng Chemical Engineering Company is responsible for 10.1 billion yuan, Air Products of the United States is responsible for 3.4 billion yuan, while Beijing Wanbonda and China Power Construction are responsible for 4.8 billion yuan in regards to thermal power and water treatment equipment – all of which lay the foundation for the future operation of this coal-to-oil facility.
The coal indirect liquefaction oil production project in Bijie, Guizhou, received approval in April 2014, in the form of a reply from the General Office of the National Development and Reform Commission granting consent for the initiation of preliminary work on the project. The project is located in Nayong County, with an annual production capacity of 6 million tons of oil products and related chemical products. The total investment amounts to 100 billion yuan, making it the largest coal-to-oil project planned to date. The project will be constructed in two phases. The first phase of the 2 million tons per year coal-to-oil project requires an investment of 34 billion yuan ； Phase 2: 4 million tons per year of coal-to-oil production. The project owner is Guizhou Yufu Energy Development Co., Ltd. (Yufu Energy), with a registered capital of 50 million yuan. Chongqing Yufu Asset Management Group Co., Ltd. (Chongqing Yufu) holds 40% of the shares. KESY Oil Technology Co., Ltd., which has backing from the Shanxi Coal Chemistry Research Institute of the Chinese Academy of Sciences as well as enterprises such as Inner Mongolia Yitai Group and Shenhua Group, holds a 10% stake in Yufu Energy.
On January 27, 2018, Beijing Wanbangda Environmental Protection Technology Co., Ltd. signed the \"Cooperation Agreement on the Water Treatment System for the 2000,000-ton/year coal-based clean fuel project in Bijie, Guizhou\" and the \"Cooperation Agreement on the slag storage area and hazardous waste disposal site for the same project\" with Guizhou Yufu Energy Development Co., Ltd. It also signed the \"Cooperation Agreement on the thermal power unit for the 2000,000-ton/year coal-based clean fuel project in Bijie, Guizhou\" with Guizhou Yufu and China Power Construction Group Guizhou Electric Power Design and Research Institute Co., Ltd. Multiple parties are collaborating to jointly invest in the construction of water treatment systems, solid waste treatment systems, and thermal power plants for the Bijie project.
It is reported that the total value of the contract amounts to 4.8 billion yuan, and the cooperation covers three projects: the water treatment system for the 2 million tons per year coal-based clean fuel project in Bijie, Guizhou; the solid waste treatment system for the same project; and the thermal power unit for that project as well. The water treatment system joint venture is responsible for supplying qualified desalinated water and recycled water to the Bijie project, as well as treating the wastewater generated during the operation of the project to ensure it meets environmental standards; the solid waste treatment system joint venture is tasked with handling the solid waste produced by the Bijie project; the heat and power generation unit joint venture is responsible for providing qualified steam and electricity to the Bijie project.
For such a large project, to decide who gets what without holding a bidding process, as if dividing up a cake – one party gets several billion and another gets 10 billion – doesn’t seem reliable.
A project of this scale should be able to withstand scrutiny in terms of system management and process management, right?
I also feel it’s as if it’s a joint investment by all parties, with each contributing capital
If that’s the case, the risk is even greater. Some investors, who don’t have much money, plan large-scale projects (illusions). Taking advantage of local governments’ eagerness to attract investment, they obtain land free of charge or at a low price, then use that land as collateral to borrow funds from banks in order to get the project off the ground. Then, attractive terms are offered to contractors to attract them, and their funds are used to build the project; afterward, the project is used as collateral to obtain revolving funds from banks, with only a small amount being paid to the contractors as payment for their work. By continuing to roll like this, one can get something for nothing. Last year, the \"Ningxia Pagoda Group\", which faced a financial crisis, used such typical tactics to seize assets worth tens of billions; it not only trapped the government but also many contractors and suppliers.
The Internet is well-developed, with abundant information available. Sun Hengchao, the chairman of that Pagoda Group, used this approach to build 10 factories, placing the company among the top 200 private enterprises.