By Shane McGinley and Andy Sambidge
UPDATE 3: Japan's Obayashi Corp denies it has downed tools in pay delay dispute.
One of the Japanese firms working on the Dubai Metro said on Thursday that the pace of construction has been slowed down while they negotiate with the Dubai government over delayed payments.
An official from Obayashi Corp - part of a consortium working on the Red and Green Lines - told Arabian Business that earlier reports that work had been suspended were “untrue”.
The Dow Jones newswire reported, citing Japan's business daily Nikkei, that a consortium, including Obayashi Corp, Mitsubishi Heavy Industries Ltd, Mitsubishi Corp and Kajima Corp, had decided to halt work for the time being, placing priority on talks with the Dubai government.
However, an official from Obayashi Corp said: "What we told [Nikkei] is that we are in negotiations with the client, the RTA of the Dubai government and we just slowed down the pace of the construction.
“We have been in negotiations for a long time. The slowdown is part of the strategy," the official added.
The consortium received roughly Y490 billion ($5.3bn) worth of orders to build the metro from Dubai's Roads & Transport Authority, with the work starting in 2005. But the actual construction expenses are expected to total almost twice as much, the newswire reported.
A statement from the RTA said: "The RTA confirms that the work of the DURL (Dubai Rail Link) consortium is continuing on the Dubai Metro project in keeping with the planned timeframe.
"The authority confirms its contractual commitment to the financial payments in accordance with the progress of the work on the project," the statement said. Mitsubishi Corp also declined to comment when approached by Arabian Business on Thursday.
The rail system was partially opened in September with its full completion now expected in the second half of the year when the Green Line starts operations.
Obayashi Corp is working on both the Red and Green Lines and the remaining Red Line stations were due to open next month.
When asked if the slowdown would lead to the February deadline been delayed, the Obayashi official said “it depends on how the Dubai government reacts to our slowdown.”
In December, it was reported that Japan's non-financial firms had some $7.5 billion in uncollected bills from work done in Dubai as of the end of October.
The data, excluding bank loans, was derived from a total of 18 projects worth about $15 billion and involving Japanese general contractors, trading houses and electric machinery manufacturers, the Nikkei said.
The figures included public works projects commissioned by the Dubai government, such as subway and road construction, it added.
I think the Construction Consortium and Nikkei daily are jealous of Dubai since Dubai unveiled Burj Khalifa (tallest tower in the world) so they are publishing vitriolic news about Dubai. How come otherwise? everything is fine here and economy is robust as displayed by opening of Burj Khalifa!
Ok, so we all felt good when the Burj Khalifa opened and now not even a week later we are brought back to earth with this sobering news. Personally, if I was not paid I would not continue to work so why should anyone expect the companies building the Metro to carry on as if everything was well and good??? You can guarantee that the world media outlets are going to pick this story up and run wild with it....more bad PR for Dubai.
There is no need to make so much noise over such issues as all of these issues can be resolved amicably. Dubai has state of the art infrastructure and we are the regional hub. As you know Dubai has always paid all the dues and will honour all it's commitments. I am sure western media is propagating and instigation all these issues.
I see the nasty press has gone Eastwards now. I wonder what everyone will say that it is now the Eastern press having a go not just those evildoers in the West? Only North and South to go then it will be the whoile world writing untruths and rumours about Dubai.
Everyone stand down. The Nikkei Business Daily is only published in the Japanese language. There must have been a translation error. So it probably was some Western media type who popagated this rumour as he/she translated it incorrectly. I am sure this will be the explanation as it cannot be true can it?
Mohd, To say "There is no need to make so much noise " is such a naive thing to say. How do you expect companies to pay salaries and repay there suppliers if they are not paid???? There is a huge link in the construction industry, when one company is not paid it has a domino effect which effects so many other companies directly and indirectly. I for one understand this clearly as the company i worked for has had to close its Dubai office as we like many other comapnies have been been waiting for payment from work done 12 months ago. Companies are making noises because there is only so long they can operate without payment and during this economic crisis companies are trying to survive let alone make a profit. If you have ever heard the saying "Once bitten Twice shy" you'll understand that the last thing this country or any other developing country needs is for companies to shy away from bidding for work as they are concered about payment.
The media is just looking for this kind of news. But I prefer to blame the media if they behave like "Mohm" who wrote there is no need for noise. So please, banks in Dubai are sending investigators to look for creditors abroad who owe 10,000 Aed or 3,000 USD while Dubai ows 5,300,000,000 USD and there is no need to make noise!!!!!!!!! Are you guys in Dubai still living in a bubble?
I am sick and tired of expats and the media and their insistence on facts, statistics, and rules & regulations. To borrow from Stephen Colbert.. reality has a well-known anti-Dubai bias.
Mohd. and Wildwine, you are kidding me right? The japanese are really angry about this and if you are in the middle of these types of deals, like me, then you'll know that they are not tendering for any more work. They have enough exposure to the UAE and it looks like it will all go south for them. In addition, if you are like any other contractor in the Middle East then you'll know that after not paying you - these guys ask for a 50% discount and then if you don't agree tell you that you'll never work here again. All these storys are true and all you have to see for proof is the vacuum left by all the skilled and educated folks leaving during the last 12-18 months. Jap's included.
So what happens to the rest of the stations that were set to open by February on the red line? If the work there is being stopped too, that is a big blow for Dubai. Some of the most important stations are still not open! Like the one for TECOM. I've been waiting for that one to open. Arabian Business correspondents, if you read this, you should look into what happens to these stations that were set for Feb.