Arabtec has denied that it is withdrawing from its US$40 billion contract for the construction of 1 million new homes in Egypt, insisting that the matter was still being discussed in Cairo.
A report in the Arabic language Alwatan newspaper on Tuesday said the builder was preparing to announce its withdrawal from the project, agreed last year, and from Egypt entirely within days as the company’s financial woes mounted.
“The company denies its withdrawal from the housing project in Egypt, and reaffirms that it’s still discussing some related details with the Egyptian’s concerned parties,” Arabtec said in a statement yesterday on the Dubai Financial Market.
Earlier this week, Arabtec announced a second-quarter loss of Dh996.4 million, compared with a profit of Dh113.5m in the year-earlier period, which it attributed to “a number of poorly performing projects”.
The company said that it was “taking corrective action in response to these legacy issues”, with the benefits likely to show in its fourth-quarter results.
Arabtec said earlier this month that the construction of the first phase of the Egypt project was “still subject to negotiations” with the country’s housing ministry, and that “an announcement will be released upon reaching an agreement”.
The first phase includes building 100,000 low-cost homes in the cities of Obour and Badr to the east of Cairo.
The project is widely regarded as part of a funding package from the UAE, aimed at maintaining stability in the region following the Arab Spring protests.
But the talks have stalled over the percentage of completed units that Arabtec should deliver to Egypt in lieu of payment for land used in the project.
Arabtec said in April that it was in talks with local and international banks for the financing of the first phase of the project.
Egypt’s president, Abdel Fattah El Sisi, said last year that it would take five years to build homes at 13 sites, with construction originally slated to start in the fourth quarter of 2014.
Arabtec shares fell 3.9 per cent to Dh1.98 yesterday, in line with a mass sell off of Dubai-listed equities in response to falling oil prices.
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