Israel rejects bid by Hong Kong’s CK Hutchison to build plant after US warns against Chinese investment

A Hong Kong-based conglomerate founded by the billionaire Li Ka-shing has lost its bid to construct and operate a US$1.5 billion infrastructure project in Israel, local government said, little more than a week after the US warned against Chinese-related investment as its rift with China escalates.

The Israeli government said on Tuesday that it had picked a local company, IDE Technologies, over an affiliate of CK Hutchison Holdings to build Sorek 2, a private-public partnership that is to be the world’s largest desalination plant when completed in 2023.

The decision was announced about 10 days after US Secretary of State Mike Pompeo expressed opposition to Chinese involvement in Israel’s infrastructure projects. While in Jerusalem on May 16, he told Israel’s public broadcaster KAN that Chinese investment could “put Israeli citizens at risk and in turn put the capacity for America to work alongside Israel on important projects at risk as well”.

According to a report on the Ynet news website, Pompeo raised concerns regarding Hutchison’s participation in the tender in a meeting with Prime Minister Benjamin Netanyahu at that time.

To be built on a site south of Tel Aviv near the Soreq Nuclear Research Centre and the Palmachim military airbase, Sorek 2 is expected to produce 200 million cubic metres of water annually – a quarter of the water Israel uses each year. The winning bidder will have the rights to operate the plant for 25 years.

Without mentioning Hutchison or China, the Israeli finance, energy and water resources ministries said in a statement that IDE Technologies, which partnered Bank Leumi, submitted the winning bid, promising desalinated water at the cost of about 1.45 shekels (40 US cents) per cubic metre, roughly 0.65 shekel cheaper than existing desalination solutions in Israel today, according to The Jerusalem Post.