Allegations of Substandard Construction and Supervision Lapses in 7.5 Billion Yuan Pumped Storage Project

Deep News12-01

On November 29, Power Construction Corporation Of China (601669.SH) issued a statement regarding media reports about quality issues at the Fujian Yong'an Pumped Storage Power Station project. The company has formed an investigation team to thoroughly verify the allegations and handle the matter according to regulations.

Investigations revealed that the lower reservoir dam, constructed by Sinohydro Bureau 3 Co., Ltd (a subsidiary of PowerChina), allegedly used substandard materials and violated construction protocols. Workers disclosed that only about 30% of anchor piles met design specifications, with the majority being defective.

Further concerns emerged about compromised supervision. Video evidence showed multiple project supervisors accepting entertainment from contractors at KTV venues, including paid companionship services. Local authorities have established a special investigation team.

The 7.5 billion yuan Yong'an project, a key national energy initiative in Fujian Province, features 1.2GW installed capacity with annual generation of 1.26 billion kWh. Construction involves multiple PowerChina subsidiaries handling different project segments through separate bids totaling over 2.4 billion yuan for design, supervision and construction contracts.

Industry experts raised concerns about potential conflicts of interest, as the project's designer, contractor and supervisor all belong to PowerChina group. This violates construction laws prohibiting such affiliations between supervising and supervised parties.

As China's dominant pumped storage developer (responsible for 90% of such projects), PowerChina reported 73.8 billion yuan in new pumped storage contracts during January-October 2024. The involved Sinohydro Bureau 3 recently announced exceeding 10 billion yuan in pumped storage orders this year.

Additional irregularities were found in slope engineering by another PowerChina subsidiary, where a major collapse occurred last August. Commentary in state media emphasized that quality control slogans must translate into actual practice, calling for thorough investigation into potential safety hazards and legal violations at this critical infrastructure project.

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