SHANGHAI (Reuters) - China's national rail operator plans to penalize some of the country's top construction firms after an inspection of a high-speed rail line revealed the use of substandard materials, illegal subcontracting and inferior work, state media reported.
Units of China Railway Construction Corp (SS:601186) and China Railway Eryuan Engineering Group Co Ltd face penalties after the issues were found on the railway line connecting Shanghai with the southern city of Kunming, the state-run Xinhua news agency said on Friday, citing China Railway Corp (CRC).
An inspection was launched on the 2,252 kilometer (1,399 miles) line following a series of accidents in one of the sections between June and July this year, Xinhua said.
It did not give details of the problems but said a flood in a tunnel forced train services to be suspended for three days. The line opened last December.
The companies, which also include construction supervisory and design firms, will be banned from making bids for other projects, face corporate credit downgrades and will have to pay penalties, according to CRC.
China Railway Construction Corp and China Railway Eryuan Engineering Group Co Ltd did not respond to calls for comment from Reuters.
China has the world's longest high-speed rail network and has set an aim to reach a length of 30,000 km by 2020. It also wants to sell its technology to countries like Russia and Singapore.