HDC working to reach agreement with WZR Property

While WZR Property Sdn Bhd group has filed for arbitration against the Maldivian government, for allegedly breaching a 25-storey office development project, Maldivian authorities are working to get the company to continue with the project.

The Malaysian company filed the arbitration at the Asian International Arbitration Centre last month, and is seeking millions in compensation.

In a statement released on Sunday, the Housing Development Corporation (HDC) said that they are currently in discussions with the adjudicators, to solve the issue that will cause the least damage to the corporation.

Noting that they are working to reach an agreement with the contractor, to continue with the project based on the novation agreement signed between the company and the government enterprise in 2017, HDC said that this includes bringing changes to make the project feasible as well as finalizing of funds.

While HDC stressed that WZR Property is seeking USD 30 million in compensation, Malaysian media outlets report that it is seeking an additional USD30-40 million.

Furthermore, HDC said that the previous government had assigned the project to the Malaysian company “without the proper funding.”

It highlighted that the project initially costed USD 122 million but that this increased to USD 155 million following the decision to move the project to Phase Two of the Hulhumalé development project.

Noting that HDC took over the project “under a novation agreement” in March 2017, it noted that the project finances were not confirmed at the time as well. HDC added that the previous government had paid USD 7.9 million to the Malaysian company “before finalizing the funds.”

HDC further noted the 25-storey office project was not within the company’s business plan, adding that this led to “feasibility issues.”

Hence, HDC was forced to acquire a loan, increasing its “balance sheet.” It further said that the only way to pay back the loan is by bringing changes to its target lease rates.

WZR Property’s chairman Datuk Sazmi Miah told Malay Mail that the company is yet to receive “a single [amount] of the payment” despite completing 20 percent of the total work and 60 per cent of the pilings for the structure. He went on to criticize the current administration, claiming that it “is kind of reluctant to continue” with the project.

Sazmi added that he expects the Maldivian government to honour the contract and “see things through” despite the change in government.