21 June 2011

Is China aiding Timor-Leste, or vice versa?

Yesterday, the Macauhub news service published East Timor signs agreements with China for aid and to boost cooperation.The article begins "The government of East Timor Friday in Dili signed two agreements with China for Chinese aid to Eat Timor’s development ..." and ends "In 2010 trade between China and East Timor totalled US$43.08 million, which was a year on year rise of 80 percent."

"Eat Timor" in the first sentence may be appropriate. The last sentence is more misleading.

Virtually the entire $43.08 million is partial payment for the ill-fated national electricity project that the government of Timor-Leste is buying from China Nuclear Industry 22nd Construction Company (CNI22).

According to the budget execution report, Timor-Leste spent $89,995,951 on the national electricity project during 2010. Of this, $40 million went to PT Puri Akraya Engineering (PAE, the Indonesian company to which the power stations were reassigned from CNI22 last September) on 30 December, and about $2 million went to ELC/Bonifica, the Italian joint venture which is supervising the construction. The remainder, minus a few thousand dollars in administrative costs, would have been paid to CNI22.

According to ELC/Bonifica, RDTL's payments to CNI22 during 2010 totalled $45.01 million.

If the Macauhub article is correct, there is no trade between Timor-Leste and China other than our Government's purchase of the electricity system from a Chinese company.

Timor Leste's 2011 state budget allocates $449 for the national electricity project (as well as $48 million for EDTL). RDTL paid $39.5 million to CNI22 between January and April 2011, with a remaining balance on CNI22's contract of about $171 million. "Trade" between China and Timor-Leste will increase again this year.

According to the Transparency Portal, RDTL has already spent $161.1 on the electricity project in 2011 -- $15.8 million in March and $145.4 million in April -- comprising 61% of all executed state expenditures so far this year. This includes $48.1 million to PAE for the Hera and Betano generating stations and $1.5 million to China Shandong International (CSI) for expansion of the existing Comoro power station.

With aid and trade like this, who needs corruption?

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