EXCLUSIVE: US $2.5 billion claim over Dubai Metro

Construction Week
by Benjamin Millington on Dec 10, 2009

The RTA is disputing a massive US $2.5 billion (AED9.18 billion) claim from the consortium responsible for building Dubai Metro, according to a source connected to the project,Construction Week has learned. The RTA has not denied the claim.

When asked if the claim was valid, RTA corporate communications director, Peyman Younes Parham said: “We won’t comment on any contractual issues.”

The source, who did not want to be named, said the consortium is insisting it is entitled to $2.5 billion in unpaid certified amounts and additional escalation costs, variation costs and delay costs due to changes in the metro design and specifications, but the RTA does not agree.

“(The RTA) is totally disputing it, they have said the money is not due and in actual fact, the consortium is already being overpaid,” he said.

“Right now it is just a claim and hasn’t got to the arbitration stage. But it is probably the biggest claim for a civil works contract ever seen in Dubai, possibly the world.”

If the claim proceeds to the courts it will be one of the most significant cases in Dubai’s construction history, he added.

The Dubai Rapid Link (Durl) consortium includes Mitsubishi Heavy Industries, Mitsubishi Corporation, Obayashi Construction and Kajima Corporation of Japan and Yapi Merkezi of Turkey.

The consortium was awarded a $3.39 billion contract in 2005 to build the metro’s red line and a $1.11 billion contract to build the green line in 2006.

In August the RTA chairman HE Mattar Al Tayer conceded that the cost of building the metro system had increased by “billions” since the original contracts were awarded.

He said more than half of the project had changed in terms of its design and facilities since its inception to cope with the growing needs of the city.

According to estimates the cost of the project increased by 75% to around $7.6 billion.

Durl corporate affairs manager Sam Majed also refused to talk about the claim.

“We don’t make any comments about anything related to the project, definitely nothing aboutcontractual agreements between us and the client, it’s all part of a 100% confidentiality agreement, so absolutely no comment,” he said.

It is still unclear how much Durl has been paid for their work on the project, but in November the general manager of Mitsubishi Heavy Industries’ Middle East office Koji Okamoto told The Nationalnewspaper they were “still awaiting payment.”

Ten of the 29 stations on the metro’s red line opened in September, with the green line expected to be operational next year.