HDC to go ahead with Finance Ministry building project after arbitration ruling

The planned 25-floor Finance Ministry building.

Housing Development Corporation (HDC) has said that it is working to recommence work on the planned Finance Ministry office building to avoid any damages the state may be liable for if the contract for the building is terminated after an arbitration ruling.

The project was awarded to WZR, a Malaysian Company. The Asian Arbitration Center recently ordered the HDC to pay USD 22.8 million to WZR over the planned 25 floors Finance Ministry building. 

The decision made by the Arbitration Center read that WZR had billed HDC for the work conducted up until the point of withdrawal from the project. HDC had failed to pay for the bill despite efforts. The ruling said that HDC was to pay USD 22.82 million to WZR within seven days. 

WZR said that 60 percent of the piling work and 20 percent of the project was complete when it was stopped. The total cost of the project is around USD 123 million.

The project’s location was changed to Hulhumale’ phase 2 and all the responsibilities for the project under the agreement were switched from the Finance Ministry to HDC on March 7, 2017, read a statement issued by HDC regarding the matter today.

When the project agreement was signed, HDC said that the funding for the project was not settled, and the location change had increased the total price of the project to USD 155 million.

The project had to be run by HDC outside its business plans, which if integrated, would see massive loan of debt added to the balance sheet of the company which in turn could bring up feasibility issues.

HDC said that the contractor presented HDC with a bill of USD 30 million for the work conducted. The figure was revised after discussions due to the incompatibility of figures.

The statement also read that HDC did not believe that the rescission of the agreement would be beneficial and could inflict irrecoverable damage on the corporation, for which it was continuously working to make arrangements. So, discussions to introduce changes to the scope of the project would be brought in addition to fair financial terms, are now underway with the contractor.

The matter is also being discussed with the Finance Ministry and relevant state institutions.