Economic News

Qatar Rail terminates major Doha Metro contract

11-05-2016 -

Qatar Rail has terminated the contract of a consortium of companies tasked with building two of Doha Metro’s flagship stations.

International construction giant OHL – part of a joint venture with Samsung and Qatar Building Co – announced that the conglomerate’s contract had been terminated in a letter yesterday to the London Stock Exchange, according to a Doha News report.

The companies had been contracted to build Doha Metro’s Msheireb and Education City stations.

The letter does not outline the reasons behind Qatar Rail’s decision to terminate the contract, but proposes that the consortium had previously filed complaints about the state transportation agency.

OHL said it had attempted to resolve “differences” between the consortium and Qatar Rail through the dispute resolution mechanisms in the contract, but these had proven unsuccessful.

“The response from the client has been to send this Notice of Termination. OHL considers that the reasons given by the client lack any legitimate grounds,” the letter states.

The news leaves many questions unanswered, including what will happen to the large number of blue-collar workers engaged on the project as well as the ramifications on the Doha Metro’s scheduled opening date of late 2019 or early 2020.

Qatar Rail did not immediately respond to a request for comment. OHL’s office in Doha declined to comment.

Qatar Rail awarded the $1.4bn (QAR5.1bn) design and construction contract to the consortium in 2013. The contract award notice, which said that work is expected to be completed by 30 June, 2018, calls the Msheireb station “the hub of the Metro network, being the major interchange station for the lines.”

It added that the Education City station will be “a dual operation station” that links the Doha Metro and the high-speed, long distance railway.

However, the scope of the work appears to have been changed, as officials recently toldDoha News that the long-distance rail line will no longer include a stop at Education City.

According to El Mundo, the Samsung-led consortium has advised they are intending to take legal action.

OHL said it intends to “claim the effective protection of its interests”. It said the remaining value of its share of the contract, as of December 2015, was $282.5m (QAR1.03bn) but that its termination would not materially affect its “financial condition”. OHL holds a 30% stake in the consortium.

This is not the first time OHL has lost a high-profile project in Qatar as it was one of the main contractors on the unfinished Sidra Medical and Research Center. Its contract wasa terminated by Qatar Foundation in 2014 for apparently failing to meet deadlines – a complaint that OHL disputed.

Sidra was originally supposed to open in 2011 but it has missed various deadlines since then, despite the hiring of a new contractor nearly two years ago.

The facility held a soft opening of its outpatient clinic last week. The full hospital’s opening date remains unknown.

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