Arabtec Holding is confident a deal to build Europe's tallest building for the Russian oil company Gazprom Neft will go ahead.
Arabtec stands ready to build controversial tower in Russia
DUBAI // Arabtec Holding is confident a deal to build Europe's tallest building for the Russian oil company Gazprom Neft will go ahead despite a public backlash against the plans. St Petersburg residents protested against plans for the 400-metre tower at a public hearing Wednesday. They claim Gazprom Neft, a subsidiary of the state-owned natural gas giant Gazprom, was wrong for trying to change the city's zoning laws to build the project, known as the Okhta Centre.
About six people were thrown out of the meeting after clashing with police and security guards. The UN Educational, Scientific and Cultural Organisation (UNESCO) has warned that the city's historic centre could be struck off the World Heritage List if the project, which will be Gazprom Neft's headquarters, is built. Arabtec, the biggest builder in the UAE, was awarded the contract to build the skyscraper in April last year but progress has been hampered by design changes as Gazprom seeks to reduce costs due to the global economic slowdown.
The original contract was valued at Dh10bn (US$2.72bn) and was the largest ever to be awarded to the firm, but it is now likely to be reduced by about Dh3bn due to cost-cutting. The latest setback is not expected to halt the project, according to Ziad Makhzoumi, the chief financial officer of Arabtec. Mr Makhzoumi said despite the delays, foundations and soil tests beganearly last month. "We signed the contract a long time ago but there have been lots of changes," he said. "The tests are part of the value engineering ? these should be finalised by the end of October and will then be presented to Gazprom." If given approval, Mr Makhzoumi expected construction to begin after March next year. The contract includes the construction of five other buildings and leisure facilities.
Russia's construction sector has been badly hit by the economic downturn, with several projects being put on hold. Arabtec has been seeking new overseas contracts to compensate for lost work in the UAE, which has shaved about Dh4bn off the company's order book. In March, the company set up Arabtec Saudi Arabia, through which it aims to generate Dh1.47bn in profits this year. Arabtec said in a statement to the Dubai Financial Market yesterday that its board would meet on Sunday to consider a proposal to set up a branch of one of its units, Austrian Arabian Ready Mix Concrete, in Saudi Arabia.
The unit would supply projects of Arabtec and its partners with concrete on a commercial basis, it said. @Email:email@example.com