Discussions underway to resume Finance office complex project: HDC
Housing Development Corporation (HDC) has revealed that discussions are ongoing to explore if the construction project of a 25 storey office complex in Hulhumale’ can be resumed.
An agreement was signed between the Maldives Finance Ministry and Malaysian company, WZR Corporation in 2016 to build an office complex in Male’. However, it was later decided to relocate the construction site to Hulhumale’ Phase II. After the current administration took over in 2018, it was decided that the government would not move forward with the project. However, payments due to WZR Corporation for works completed have not been paid until now. Earlier this week, the Asian Arbitration Centre (AAC) ordered the Maldives to pay USD 22.8 million due to WZR within seven days.
A news statement issued by HDC about AAC’s decision said all responsibilities tied to the Finance Ministry was transferred to HDC under a novation agreement with the government’s decision to change the building site to Hulhumale’. However, HDC did not have the funds to implement the project at the time, said the statement.
Following the decision to locate the building in Hulhumale’ the cost of the project increased to USD 155 million, said HDC. Since the project was planned abruptly outside of HDC’s corporate business plan, and due to the increase in project cost, the corporation decided that the factors would contribute towards a huge loan that would reflect in the company’s balance sheet. The feasibility of the project would remain challenging, said HDC.
“Even though WZR claimed USD 25 million during the adjudication process, the adjudicator concluded that the contractor is entitled to USD 22.8 million for works completed. The adjudicator ordered to pay the due amount within seven days,” said HDC in their statement.
While the Asian Arbitration Centre has ordered HDC to pay USD 22.8 million to the contractor, HDC said they do not believe it is feasible to terminate the agreement with WZR. The corporation was working to avoid an irrecoverable loss to HDC and to find a way forward to continue with the project, said HDC.
In this regard, discussions are underway to bring favourable changes to the scope of the project and to ensure that a financial arrangement that does not burden the government or HDC.