Contractors consider legal action against Tabreed
District cooling major seeking discounts on completed projects
District cooling major Tabreed has allegedly withheld payments to some of its leading contractors, and is seeking discounts for some completed projects, according to Reuters.
The news agency claimed that some contractors are considering legal action against Tabreed, which has written to firms indicating that future payments will be contingent to reaching agreement over discounts.
"They are looking for backdated discounts on projects built and handed over. This is unprecedented," said an executive of an Abu Dhabi-based contracting firm told Reuters, asking not to be named due to confidentiality reasons.
"We are ready to renegotiate pricing on ongoing or future projects, but Tabreed is not supportive. It is going to a dead end and the solution now is legal recourse."
In August, ratings agency Standard & Poor’s revised its long-term corporate credit rating on Tabreed to 'BB-' from 'BB', after the company announced reported net income dropped by 4% in the first half year-on-year.
"With 17 plants under construction, we are constantly in discussions with our contractors with regards to changes in the market conditions pertaining to construction and equipment costs," Tabreed CEO Sujit Parhar told Reuters in a statement.
"While we cannot comment on the terms of individual contractor relationships, I can assure you that Tabreed is paying and will continue to pay its contractors."