(Bloomberg) -- The Hong Kong conglomerate founded by billionaire Li Ka-shing lost a bid for an infrastructure project in Israel, weeks after the U.S. asked the Middle Eastern country to review potential security threats posed by China-based companies.

An affiliate of CK Hutchison Holdings Ltd., the flagship of the tycoon’s sprawling business empire, lost out on the contract to build and operate Israel’s biggest desalination plant to IDE Technologies, a local company, according to a government statement.

The Israeli government’s decision to choose a domestic bidder is the latest blow to CK Hutchison Chairman Victor Li, two years after his bid to buy a gas pipeline operator in Australia was blocked on national security concerns. The CK group’s overseas acquisitions and projects have been central to its push to diversify from its mainstay businesses of telecommunications, retail, property and ports.

Representatives for CK Hutchison in Hong Kong didn’t immediately respond to a request for comment.

Hutchison Water International Holdings Pte. had already been operating a desalination plant in the vicinity in partnership with IDE. The plant supplies 20% of Israel’s urban drinking water demand, according to Israel’s economy ministry.

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The IDE bid of 1.45 shekels per cubic meter of water was the “lowest price in the world for desalinated water,” saving the country an estimated 3.3 billion shekels ($940 million) during the lifetime of the facility, Israel’s Finance Ministry said. The plant will have an annual output of 200 million cubic meters of water and is expected to be the largest in the world, increasing Israel’s desalination potential by 35%.

The project will be financed by a consortium led by Bank Leumi Le-Israel, the ministry said. The European Investment Bank will lend 150 million euro ($164 million).

According to a report in Ynet news website, U.S. Secretary of State Mike Pompeo raised concerns regarding Hutchison’s participation in the tender in a meeting with Prime Minister Benjamin Netanyahu two weeks ago.

Huawei Troubles

Trump administration officials have been widening calls on U.S. allies to shun some Chinese businesses perceived as threats to their national security. The campaign has included pressure on wireless carriers to avoid using equipment made by Huawei Technologies Co., China’s largest technology firm. Earlier this month, the Commerce Department barred chipmakers using U.S. equipment from supplying Huawei without U.S. government approval.

In 2018, CK group formally walked away from an A$13 billion ($8.6 billion) bid to buy APA Group, an operator of gas pipelines in Australia, after the government there said the deal would be “contrary to the national interest.” That was the first setback for Victor Li, 55, who succeeded his father Li Ka-shing, 91, as chairman of the conglomerate the same year.

(Updates with details throughout)

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