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Sat 10 Jan 2009 04:00 AM

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Meydan axes racecourse contract

A dispute is underway between Dubai-based Meydan and Malaysian contractor WCT after the developer cancelled the US $1.25 billion (AED4.6 billion) Meydan Racecourse construction contract last week.

A dispute is underway between Dubai-based Meydan and Malaysian contractor WCT after the developer cancelled the US $1.25 billion (AED4.6 billion) Meydan Racecourse construction contract last week.

In a statement to Construction Week Meydan said that the contract was cancelled because WCT "failed to abide by the time schedule for the completion."

The statement also said alternative companies were selected.

But WCT, which was awarded the contract in September 2007 as a 50/50 joint venture with Dubai-based Arabtec, disagreed.

"The board views the cancellation as a breach of contract on the part of the employer," the firm said in a statement.

"The company, through the joint venture, is currently considering all its options and will take the necessary steps to protect the Group's interests."

A Kuala Lumpar-based JP Morgan analyst, who is close to WCT management, told CW that 60% of construction work had been completed, but the joint venture had only been paid for 28% of it.

"I wouldn't have been surprised had there been a re-negotiation," he said. "Either a combination of lower contract values to reflect lower pricing or a down-scoping exercise where the original contractors could do something smaller.

"What was disturbing was the announcement that the contract had been cancelled. It is a strange way to start the year for the client, the contractors and the market."

Shares in WCT took their biggest dive in 14 years on the news, sliding 30% before trading was suspended in Kuala Lumpur.

"In any construction project there are always differences between what you want to achieve and what is actually happening on the ground," a WCT spokesman said.

"Changes to the design and to the work that is to be done are always happening in every project, especially in areas like Dubai where construction is always so intense."

Arabtec chairman Riad Kamal remained tight-lipped on the subject. "Now is not really the time to discuss the reasons why the contract was cancelled," he said.

"I would rather not go into this for reasons of non-disclosure and other commitments."

Meydan said it is taking steps to commission other companies to complete the racecourse by 2010. It is aiming for completion of the course in time for the Dubai World Cup horse race.

The original contractual date for completion was October 7, according to WCT.

The contract covered construction and completion of the main building works, external works and infrastructure works of the racecourse project.

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