China Overseas Engineering Group (COVEC) has cancelled its highway contract with Poland midway through construction, claiming the road construction authority was late making payments, the People’s Daily reported Friday.

COVEC, a subsidiary of China Railway Group, one of the Asia’s largest construction and engineering firms, won the contract to build a 49km stretch of highway in Poland in 2009. It was the first time a Chinese company had won such a large European contract.

Work on the project started last June. As of May, the Chinese firms have completed 15 percent of the A section and 18.8 percent of the C section of the highway. Chinese have invested more than US$140 million in the project, the People’s Daily said.

But the project is projected run over budget due to higher standards raised by the Polish government, rising raw materials prices and complicated geological conditions. According to calculations conducted by the Chinese contractor, COVEC will be paid US$391.7217 million. To complete the project on time, however, it will need to spend US$786.0696 million, the company said, meaning COVEC will take a huge loss.

The setback for the Chinese companies is due to a lack of understanding of the overseas market, poor supervision and substandard risk management, said a spokesperson for China Railway Group.

據《人民日報》報道,中國海外工程有限責任公司已向波蘭提出了終止高速公路項目，稱業主工程款支付滯后。

2009年，作為中國鐵路工程總公司旗下子的公司，中國海外工程有限責任公司中標了波蘭A2高速公路項目的A、C兩標段，總長49公里。這是中國企業首次進入歐盟國家的大型基礎設施項目。

該工程于去年6月正式開工。截至今年5月，工程A標已累計完成合同額的15%，C標完成合同額的18.8%，。中方目前已投入資金超過1.4億美元。

而由于業主大幅提高設計標準、建筑材料價格大漲和地質條件復雜等，工程投入大大超過原計劃。據中方的測算結果，若按期完成工程，兩標段預計總投入資金78606.96萬美元，預計收回合同款39172.17萬美元。

中鐵相關負責人表示，缺乏對目標市場的全面了解，缺乏有效監管和海外項目風險管理機制不健全是此次公司波蘭遇阻的主要原因。