Jazan Economic City contracts terminated, Malaysian construction firm seeking legal advice
Malaysian construction firm MMC Corp Bhd said the Saudi government had terminated the rights of its joint venture with Saudi Binladin Group to develop the $30 billion Jazan Economic City in Saudi Arabia.
"The termination was as a result of circumstances which gave rise to several difficulties that interrupted the progress of the project," MMC said in a local stock exchange filing on Monday, without detailing the "difficulties".
MMC will be engaging consultants to advise on matters relating to the project termination and compensation, it added.
"Until the status of the termination is clearer, the board is not in a position to determine precisely the impact on the group's future earnings," MMC said.
The Saudi Arabian General Investment Authority awarded the project to the joint venture of MMC and the Binladin group in November 2006, and it was 30 percent complete as of September 2010, according to news reports at the time.
MMC said in 2006 that Jazan Economic City would be Saudi Arabia's fourth economic city after King Abdullah, Prince Abdul Aziz bin Mousaed and Madinah. Economic cities are built to attract domestic and foreign investment into industry and business and help diversify Saudi Arabia's oil-based economy.
The project, 725 km south of Jeddah by the Red Sea, encompasses industrial and non-industrial zones on a site measuring approximately 117 square km to be developed over 30 years.
The announcement came after the close of the market on Monday. MMC shares had risen 1.15 percent to 2.64 ringgit per share, while the benchmark stock index fell 0.04 percent.