(Yicai Global) July 1 -- State-owned engineering contractor China Gezhouba Group has refuted claims that it illegally outsourced the construction of a power supply for Line 1 of the Qingdao Metro.

The Wuhan-based firm acknowledged that its subsidiary China Gezhouba Group Electric Power had managed the project poorly and pledged in a statement published today that it would rebuild the power supply and investigate the staff involved.

Liu Feiyun, head of Qingdao Yuanwang Construction, claimed online that his company was the third paid to build the CNY141 million (USD20.6 million) power supply after the existing two subcontractors outsourced the work themselves.

Yuanwang was paid to increase the space between steel bars -- going against design specifications -- in order to save on materials, Liu confessed, adding that this could be dangerous for the metro track.

Qingdao Metro confirmed in four statements from June 27 through June 30 that there were issues with construction and that it had blacklisted Gezhouba Electric Power. The project owner will evaluate damages and fix issues along the whole line, it added, saying so far 1.5 kilometers of the 7.7 kilometer track have been built.

Gezhouba Electric Power won the contract last March and subcontracted to Qingdao Yonglijie Electric Power Construction, the estranged contractor said today, adding that the subcontractor then outsourced the work in March this year. Gezhouba discovered this on May 20 and severed ties with Yonglijie on June 5, it claimed.

Editor: James Boynton