Webuild, a global leader in the construction of large and complex infrastructure, has announced that Saudi Arabia’s futuristic NEOM development has cancelled its multi-billion-euro contract for a major water and architecture package linked to the three dams at its Trojena mountain project.
“NEOM has exercised the termination for convenience regarding the construction in Trojena (Saudi Arabia) of a system of three dams designed to feed a freshwater lake, as well as the architectural structure ‘The Bow.”, said Webuild in a press statement.
The termination – also exercised by the client with respect to other contractors for other works in the area – became effective last month (March 29).
The top Italian builder said as of that date works stand at 30 per cent completion, with a remaining project backlog of approximately €2.8 billion.
Costs accrued up to the effective date of the termination, as well as those related to the early termination of the contract – including site disengagement and demobilisation activities – will be reimbursed by the client, leaving the Webuild Group unharmed by the effects of the termination, as provided under the contract and applicable laws, said the company in its statement.
The Line project involved a 12.5-km underground tunnel in Tabuk.
Webuild’s construction backlog, net of the residual activities related to the Trojena contract, remains in excess of €50 billion, it added.
A similar termination notice was given by NEOM to Malaysia-based Eversendai Corporation for its structural steel contract at the Trojena Ski Village project, citing geopolitical developments in the Middle East.
Eversendai stated that it is in the process of preparing documentation to substantiate the progress of works completed under the contract.
The group indicated it will submit commercial claims, including compensation for the termination and associated demobilisation costs.
“We are preparing the necessary documentation to substantiate project progress and will submit our commercial claims, including compensation for termination and related demobilisation costs. The group expects to be fairly compensated once the claims have been fully substantiated,” the company said in its bourse filing.
Eversendai had been awarded the contract in March 2024 in collaboration with Saudi-based Al Bawani Company and since then it had executed the project work in accordance with contractual obligations up to the termination date. The project had an original completion timeline of approximately 28.5 months.
Prior to these Trojena project works cancellation, NEOM had last month terminated a tunnel construction contract awarded to a consortium led by South Korean builder Hyundai E&C with partner Samsung C&T Engineering & Construction.
The $1 billion contract was meant to be executed by a consortium comprising Samsung C&T, Hyundai E&C and Greece-based Archirodon. Hyundai E&C’s disclosed share stood at about 723.1 billion won ($500 million).
Hyundai E&C in its regulatory filing, said it had received formal notice from NEOM confirming cancellation of the contract, which had originally been awarded in June 2022.
The project covered construction of a 12.5-km underground tunnel section in Saudi Arabia’s Tabuk Province and formed part of transport infrastructure planned beneath “The Line,” NEOM’s flagship linear urban development.
The tunnel was intended to carry highways, metro services and freight rail systems designed to support mobility within the futuristic city, stated the top builder.
Hyundai E&C stressed that the settlement for completed work had already been finalised and that no financial loss had so far arisen from the termination.