Samsung C&T held a 50 per cent stake in the consortium constructing the two major Doha Metro stations. Reuters
Samsung C&T held a 50 per cent stake in the consortium constructing the two major Doha Metro stations. Reuters

Qatar Rail terminates main Doha Metro station builder’s contract



Qatar Rail, the body responsible for delivering the US$17.8 billion Doha Metro project, has terminated the contract of the consortium that was building its main stations.

The $1.4bn design and build contract to construct the major Msheireb and Education City stations had been awarded to a consortium comprising the South Korean builder Samsung C&T, Spanish contractor Obrascon Huarte Lain (OHL) and Qatar Building Company in May 2013.

But in a statement, OHL said that it had received notification of its contract’s termination within the next 14 days, citing “non-compliance of certain contractual obligations”.

Samsung C&T held a 50 per cent stake in the consortium, while OHL held 30 per cent and Qatar Building held 20 per cent.

OHL said that before its contract was terminated, the consortium had presented the clients with several points of dispute, which, under the terms of the contract, should have led to some form of negotiation of formal arbitration, rather than the termination of its contract.

The Spanish contractor also said that the reasons given for its termination “lack any legi­timate grounds”. It said that as a company it only had work outstanding to the value of €247.7 million (Dh1.04bn).

The major stations contract is a key part of the Doha Metro project. Msheireb is the central station, linking all three of the lines under construction during the project’s first phase (red, green and gold).

Education City is the starting point for the green line, and also the connection point between the metro and Qatar’s proposed long distance rail network.

A spokesman for Qatar Rail said that it has now appointed Consolidated Contractors Group to take over the project. It argued that its decision was taken on “solid contractual grounds”.

Qatar Rail stated that it would take every step to protect its rights and believes that its decision was made on solid contractual grounds.

The spokesman also said that it was working to ensure that it will “minimise delays and risks to this part of the Doha Metro project”.

He added: “Work will continue on the Major Stations project sites as planned, and discussions are under way with the subcontractors to ensure ­continuity.”

Qatar Rail recently announced that tunnelling activity was about 90 per cent complete and that the overall Doha Metro project was nearing 40 per cent completion.

In December, Markus Dem­mler, senior director of the ­Qatar Integrated Rail Project, said that progress was being made at Msheireb station, which had about 2,000 workers on site.

He told the body responsible for the delivery of the Fifa 2022 World Cup, the Supreme Committee for Delivery & Legacy, that it was “one of the biggest metro stations under construction anywhere in the world”.

He added that the station would be completed by mid-2018.

The entire first phase of the Doha Metro project, which will contain 86km of tracks and 38 stations, is due for completion in 2019.

This week, Qatar was named as the second-best market globally for infrastructure investment by the construction consolutancy Arcadis. It said Qatar has the third-richest economy in the world in terms of GDP per capita, and has maintained heavy investment in infrastructure, suffering from declining hydrocarbon revenues.

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The biog

Favourite book: You Are the Placebo – Making your mind matter, by Dr Joe Dispenza

Hobby: Running and watching Welsh rugby

Travel destination: Cyprus in the summer

Life goals: To be an aspirational and passionate University educator, enjoy life, be healthy and be the best dad possible.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

COMPANY PROFILE
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Founders: Iheb Triki and Mohamed Ali Abid
 
Based: Tunisia 
 
Sector: Water technology 
 
Number of staff: 22 
 
Investment raised: $4 million 
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