MMC Corp and Saudi Binladin Group has rights of its joint venture terminated over ‘difficulties that interrupted progress of project’
MMC Corp Bhd, the Malaysian construction firm, has said that the Saudi government has terminated the rights of its joint venture with Saudi Binladin Group to develop the $30 billion Jazan Economic City.
The company said that be engaging consultants to advise on matters relating to the project termination and compensation, a Reuters report said. The Saudi Arabian General Investment Authority awarded the project to a joint venture between MMC and the Binladin Group in November 2006.
“The termination was as a result of circumstances which gave rise to several difficulties that interrupted the progress of the project,” MMC said in a local stock exchange filing on Monday, without detailing the “difficulties”, the report said.
“Until the status of the termination is clearer, the board is not in a position to determine precisely the impact on the group’s future earnings,” MMC said.
According to local media reports, Jazan Economic City was 30% complete as of September 2010.
The project would have been Saudi Arabia’s fourth economic city after King Abdullah, Prince Abdul Aziz bin Mousaed and Madinah. The economic cities are being built to attract domestic and foreign investment into industry and businesses in Saudi Arabia. They are part of the Kingdom’s attempts to diversify its economy away from oil.
Jazan Economic City is located 725km south of Jeddah, by the Red Sea. It encompasses industrial and non-industrial zones on a site measuring approximately 117sqkm. It will be developed over 30 years.