Arabtec has stopped work on one of Nakheel's largest housing projects because it has not been paid by the Dubai World-owned developer, says a senior official of the construction company. The country's largest construction company had been building Al Furjan, a development that was planned to include 4,000 homes. Arabtec won the US$816 million (Dh2.99 billion) contract for the first 1,500 homes in June 2008.
Riad Kamal, the chairman of Arabtec, said the company suspended work at the beginning of the year after building 550 villas at the development in Dubai. "We haven't been paid, so it's not ongoing." Nakheel, which sold 2,000 units at the development, continues to struggle to pay its construction suppliers during a crippling cash crunch. Mr Kamal added that no payments had yet come through from the developer since a $10 billion cash injection from Abu Dhabi was announced in December, and that any payment terms agreed between the companies were confidential.
Arabtec's order book has been hit hard by the economic downturn. According to Al Mal Capital, cancelled projects in the UAE have reduced the value of Arabtec's order book to about Dh31bn, compared with about Dh39bn at the end of 2008. Still, the company hopes a proposed acquisition by Abu Dhabi's Aabar Investments will provide a hedge against any further shortfall in capital resulting from delays in payments from developers and improve its ability to raise funds for future projects.
Aabar said last month it would acquire 70 per cent of Arabtec in a deal worth $1.74bn. Mr Kamal said the deal was still "ongoing" and that due diligence was being finalised. It would still need the backing of 75 per cent of Arabtec's shareholders and approval from government regulators before concluding. "I should hope that whatever the board of Arabtec sees as beneficial, that the shareholders will also see as beneficial," he said.
Arabtec is also awaiting the go-ahead on a $3.1bn contract to build the controversial Okhta tower in St Petersburg, Russia. Gazprom Neft, a subsidiary of the state-owned natural gas giant Gazprom, last September won final approval from the city's authorities for the 400-metre tower. "As far as we know, the project is doing ahead," Mr Kamal said. agiuffrida@thenational.ae
