Concern on the Future
It has been found that the state-run Saline Water Conversion Corporation (SWCC) of Saudi Arabia told Samsung Engineering to stop its power generation and seawater desalination plant construction project in Yanbu, Saudi Arabia.
This turnkey project worth 1.6 trillion won (US$1.3 billion), which Samsung Engineering won from the SWCC back in 2012, was scheduled to end late last year. However, the two parties’ opinions clashed with regard to a change in contract terms and the following cost burdens on the part of the ordering party and the date of completion has been postponed until August 2018.
“A change occurred in the specifications of the turbines to be procured from Alstom and it resulted in the clash of opinions in spite of our efforts to avoid it with approximately 55% of the entire project completed,” Samsung Engineering explained.
According to the South Korean company, most of the risk factors related to the project were already dealt with two years ago and, as such, the losses resulting from the discontinuation are likely to be insignificant. The company has been paid about one trillion won (US$830 million) in step with the progress of the project. The halt is likely to affect Samsung Engineering’s business in Saudi Arabia in the future though in that the SWCC is a company run by the largest oil-producing country in the world.