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.

据《人民日报》报道,中国海外工程有限责任公司已向波兰提出了终止高速公路项目，称业主工程款支付滞后。

2009年，作为中国铁路工程总公司旗下子的公司，中国海外工程有限责任公司中标了波兰A2高速公路项目的A、C两标段，总长49公里。这是中国企业首次进入欧盟国家的大型基础设施项目。

该工程于去年6月正式开工。截至今年5月，工程A标已累计完成合同额的15%，C标完成合同额的18.8%，。中方目前已投入资金超过1.4亿美元。

而由于业主大幅提高设计标准、建筑材料价格大涨和地质条件复杂等，工程投入大大超过原计划。据中方的测算结果，若按期完成工程，两标段预计总投入资金78606.96万美元，预计收回合同款39172.17万美元。

中铁相关负责人表示，缺乏对目标市场的全面了解，缺乏有效监管和海外项目风险管理机制不健全是此次公司波兰遇阻的主要原因。