Web posted at: 12/2/2009 2:34:3
Source ::: The Peninsula
DOHA: Fed up with the way it is being treated by the Public Works Authority (Ashghal), German construction major Bilfinger Berger is planning to pull out of Qatar. The company, which is involved in some key projects in the country, announced yesterday it was seriously considering the pull out due to disagreement with Ashghal.
“The bad experience with the Doha project prompts us to reconsider our commitments in the Gulf region”,
Reuters quoted Bilfinger Berger Chief Executive Herbert Bodner as saying to the German media yesterday.
The CEO’s announcement comes in the wake of the German construction major losing a legal battle with Ashghal over the multi-million riyal Ashghal project, a key component of Ashghals’ prestigious Doha expressway project. Obtaining a court order in favour of it, the Ashghal has now issued orders to hand over the project work to three Qatari companies.
In fact, the German company was expecting the contract termination long ago. The project uncertainty has hit it so hard that it was forced to cut its full-year (2009) profit forecast by at least $145m. It reduced its forecast for earnings before interest and taxes (EBIT) this year to a range of ¤210m to ¤230m against the previous forecast of ¤250m.
Bilfinger’s Q3 2009 Interim Report contains detailed reference to their flopped project works in Qatar. In fact, the Q3 report begins with the statement that the company’s total earnings were burdened by risk provisions made in relation to a road construction project in Qatar.
“In the third quarter of 2009, as previously reported, we recognized provisions totaling ¤80m for Doha expressway project in Qatar. This resulted in an EBIT for the first nine months of 2009 of ¤140 m. EBIT in the prior-year period was burdened by one-time effect in the amount of ¤65m, which was partially offset by a capital gain of ¤9m”, the report said. Barwa City is another major project that Bilfinger is working on in Qatar.
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