Breaking its prolonged silence on reports of the suspension of Qatar’s prestigious Doha Expressway project and the consequent legal battle with its ‘client’, German construction major Bilfinger Berger on Wednesday said it was expecting the termination of the multi-million riyal contract for the highway.
“Despite interventions at the highest level, the client is not willing to settle outstanding debts running into the triple digit million euros,” Bilfinger said in its new earnings outlook posted on its website.
Bilfinger has put the blame on its ‘client’ for the undue delay in the completion of the prestigious project. Public Works Authority’s (Ashghal) two major road projects have run into trouble due to disputes with contracting companies.
The project has been suffering major disruptions and delays for which the client is responsible. For this reason, the construction period has more than doubled from the original 24 months. The client has already accepted responsibility for a 21-month extension of the construction period, Bilfinger said.
Bilfinger said that it has serious disputes with its ‘client’ about the payment and some of the disputes are before the courts.
“The client is now attempting to avoid the financial obligations by terminating the contract,”
The German company is expecting a prolonged legal dispute in Qatari courts. The project uncertainty has hit Bilfinger so hard that it was forced to cut its full-year profit forecast by at least $145m. It reduced its forecast for earnings before interest and taxes this year to a range of ¤210m to ¤230m against the previous forecast of ¤250m, the company’s new earnings forecast said.
“Earlier Wednesday, Bilfinger Berger issued a full-year 2009 profit warning, citing the expected contract termination due to a legal dispute with the client. It lowered its earnings before interest and taxes forecast to between ¤210m and ¤230m from ¤250m previously,” reports in the international media said.
The Doha Expressway project is part of the road development programme which aims to connect north of Doha with the south and east with west.
Qatar’s another multi-million road project is also caught in a legal quagmire. Ashghal has reportedly slapped a lawsuit on a Malaysia-based company, an international consulting company and an insurance company in Qatar, seeking damages in connection with the Salwa road project.
While the construction company alleges that Ashghal has stopped payments to the tune of millions of riyals even after issuing the certificate of completion, an expert panel set up by Ashghal found that the construction quality was not up to the Qatari specification.
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