Housing Development Corporation (HDC) has stated efforts are underway to arrange funds for the completion of the 25-storey building of Ministry of Finance under a revised scope of work.
In a statement, HDC stated the project had been contracted by the government to WZR Property of Malaysia on March 1, 2016 for a cost of USD 122.7 million. HDC revealed the project agreement was novated to HDC in March 2017, following the decision to relocate the building to Hulhumale'. However, the state-owned enterprise stated the funds for the project had not yet been arranged when the novation agreement was signed, while the cost of the project had also risen to USD 155 million due to the relocation.
Noting the project was not part of its business plan, HDC said paying up the cost of the project would lead to a significant burden on its balance sheet. HDC stated efforts are underway to complete the project under a revised scope of work, as the state would have to bear large costs if the agreement is annulled. The state-owned enterprise said discussions are ongoing with the finance ministry and relevant state institutions to arrange funds for the project.
In September 2019, WZR asked the Asian International Arbitration Centre (AIAC) to appoint an adjudicator to settle the payment dispute with HDC, after the corporation was not able to pay the contractor for the work which had already been carried out. The adjudicator has ordered HDC to pay USD 22.8 million to WZR Property within seven days from July 5.
HDC revealed the contractor had initially billed the corporation for USD 25 million for the work carried out when the agreement was novated, adding the bill had later been lowered upon a joint verification conducted with the contractor and the adjudicator as the bill was deemed too high with respect to the work carried out.
The project to build a 25-storey building for the finance ministry was initiated by the previous administration to resolve the issues relating to lack of space in the ministry.