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Arabtec drops the bomb on Dubai
Arabtec singles out government-owned developers for Arabtec’s gargantuan backlog, even though he said he wouldn’t.
May 11, 2009 10:30 by Dana El Baltaji
The Dubai government has been accused of not paying their contractors before, but the accusations were made mostly by foreign firms and consultants. This week, Arabtec Holding ‘s CEO, Riad Kamal, has dropped the bomb with a series statements about the backlog of money it is owed by Dubai.
In an interview supplied to Emirates Business, Kamal revealed Arabtec’s order book and backlog: “The figure stands at AED28.4 billion. This includes AED10 billion for the Okhta Centre in Russia. Our backlog is AED18.4 billion but I can’t comment on the breakdown between Dubai and Abu Dhabi.”
Yesterday, however, he commented on the breakdown.
“The outstandings for Arabtec stand at AED3.6 billion and 80 percent of this outstanding amount is owed by Dubai government and quasi-government entities,” he told reporters on the sidelines of a news conference in the UAE.
The comment was made after Abu Dhabi-based International Capital Trading (ICT) awarded both Arabtec and National Projects and Construction a AED1.6 billion contract to build a development on Abu Dhabi’s Corniche.
The value of the contract was devalued from last year’s estimate of AED2.7 billion – 2.8 billion; nevertheless, it lifted Arabtec’s share price by 7.95 percent to AED2.55 (although it fell to 2.49 on Monday).
Kamal’s comments at the conference may be construed as antagonistic toward Dubai, especially given the company’s arbitration proceedings – in collaboration with Malaysian engineering firm WCT Berhad -against Dubai-based Meydan over the Meydan Racecourse contract cancellation. The proceedings began in March.
In January 2009, Meydan cancelled the AED4.6 billion main contract for the development citing delays in construction.
Both Arabtec and WCT Berhad completed 70 percent of their share on the project, and are hoping to recover AED1.69 billion in compensation from Meydan.
“It could take three weeks, it could take three months, or it could take three years,” said Thomas Barry, CEO of Arabtec Construction – a subsidiary of Arabtec Holding – to Construction Week on Sunday. “We are continuing to pursue what we believe to be our rights.”