The speed at which Omani building contractors are being paid “has become significantly longer than it was a few years ago”, according to one of the sultanate’s biggest contractors.
“The time taken by some clients and consultants to settle contractual matters and close out contracts has become significantly longer than it was a few years ago. This affects the recovery of retention money, which again affects the cash position,” Mohiuddin Mohamad Ali, vice chairman at Galfar Engineering & Contracting, told Arabian Business’ sister website Construction Week.
In its Directors’ Report, published as part of its 2018 financial results, Galfar said outstanding payments have “impacted ability to do business and […] our profitability, due to the company borrowing the overdue receivables”.
“Management of our borrowings has now become extremely critical until such time that the receivables backlog is resolved,” Hans Erlings, CEO, Galfar, added.
Ali also said that it was pursuing legal recourse to help speed up payments and is confident this will led to success later this year.
“Arbitration awards in favour of the company are expected to be realised in 2019,” he said. “Part of the arbitration amount as already been realised in the first quarter [of the year].”
Despite these challenges, Galfar’s financial performance has been positive. The group reported a profit of $5.7 million for 2018, which marks a steady improvement over 2017’s loss of $16.8 million.
Oman’s economy has been challenging in the wake of lower oil prices. This week, the World Bank reported that economic growth will slow to 1.2 percent in 2019, down from 2.1 percent last year. The sultanate is projecting a budget deficit of $7.3 billion, or 9 percent of GDP, this year, Reuters reported.For all the latest construction news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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