South Koreas Samsung Engineering said Monday it wont be seeing through the construction of a $3 billion, 3,100-megawatt power and desalination plant in Saudi Arabia before its completion after its Saudi client terminated the contract due to difference over the final construction terms.
In a disclosure statement, the company said it received a termination notice on Sunday from state-owned Saline Water Conversion Corporation on the engineering, procurement and construction contract. In 2012, Samsung-led consortium won the $3 billion project to build a power plant on the Red Sea coast in the Yanbu Industrial City as part of the countrys multistage project to desalinate and supply freshwater and power to the industrial city and residents of Yanbu and nearby region.
Samsung was the main constructor for the power plant, commanding half, or $1.5 billion in lump-sum contract value. At the time, the contract made up nearly 20 percent of the Korean construction companys annual sales.
The contract was initially due to be completed by December 28 last year, but pushed back to August 25 next year upon agreement.
A company official said about 55 percent of the construction has been completed and claimed the contract termination wont hurt its bottom line because it has already been paid for the construction so far.
Shares of Samsung Engineering ended down 3.4 percent, or 400 won, at 11,250 won ($9.5) from the previous session.
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