WARSAW - Construction of a key stretch of highway in Poland by Chinese company COVEC has stopped after the firm failed to pay Polish subcontractors, the infrastructure ministry said on Thursday.

"We are in talks with COVEC, in an attempt to get out of this dead-end. We've ordered the Chinese side to pay their bills immediately," ministry spokesman Mikolaj Karpinski said.

"Radoslaw Stepien, our deputy infrastructure minister, has already had two meetings about this with COVEC chief Sang Yuanming, who came to Warsaw specially," he added.

In September 2009 COVEC, the China Overseas Engineering Group Company, beat several European competitors in the race to build 49 kilometres (30 miles) of the A2 highway linking the Polish and German capitals, Warsaw and Berlin.

The deal was a watershed, with experts underlining that it was the first large-scale Chinese construction and public works operation in the European Union. COVEC bid to do the work for what was considered a low price.

Work on the highway has been all but frozen since the start of the week, however, with Polish suppliers refusing to deliver construction materials to the site without being paid, an AFP reporter noted at the scene.

The construction is part of Poland's ongoing issuing of tenders as it strives to upgrade its infrastructure in time to co-host the high-profile 2012 European football championships along with neighbouring Ukraine.

COVEC's role in the highway project had already sparked controversy. In January, 2010, Polish constructors alleged that they were the victims of dumping because the Chinese group's bid was so low.

Source: AFP