Contract Amendment Signed with Client for 14.7125 Trillion KRW
Completion of Remaining 70,000 Units Construction in Bismaya New City
Hanwha Construction Division is resuming construction of the Bismayah New City in Iraq. The contract was terminated in October 2022 due to non-payment by the client, and negotiations for contract modifications have been underway since last year to restart the project. A contract modification worth KRW 14.7125 trillion has been signed with the client to complete the remaining 70,000 housing units.
On the 6th, Hanwha Construction Division announced that it had signed a contract modification with the Iraqi National Investment Commission (NIC), the client for the Bismayah New City project, to resume construction. The contract modification amount is USD 10.398 billion (KRW 14.7125 trillion). This amount includes compensation for project delays caused by the client and losses according to local laws, increasing by USD 277 million (approximately KRW 391.9 billion) from the original contract amount of USD 10.121 billion.
The construction period is from May 30, 2012, to December 31, 2032. The contract will take effect only after approval by the Iraqi government’s Council of Ministers, and the contract terms may be changed or canceled during the approval process.
The Bismayah New City construction project in Iraq is a large-scale development by Hanwha Construction Division to build a new city with 100,080 housing units and social infrastructure in the Bismayah area, located 10 km southeast of Baghdad (the capital of Iraq). The expected population is about 600,000. Hanwha Construction Division has completed construction of about 30,000 housing units, and residents are living in 21,480 units that have been handed over to the client.
Hanwha Construction Division won the contract in 2012 to build the new city on an 18.3 km² site in Bismayah, which is six times the size of Yeouido, including roads, water and sewage systems, power grids, and 100,000 housing units. Due to non-payment by the client, Hanwha Construction Division terminated the contract in October 2022, ten years after starting the project. Following NIC’s request to resume the project in January 2023, a Memorandum of Agreement (MOA) was signed, and negotiations for a contract modification to build the remaining 70,000 housing units have been ongoing. Hanwha Construction Division received part of the outstanding payment, USD 300 million, in January and December last year and resumed partial works such as civil engineering and landscaping.
Hanwha Construction Division stated, "We will do our best to obtain approval from the Iraqi government’s Council of Ministers for this contract. If the largest-scale K-New City export project resumes, it is expected to revitalize the sluggish construction market and contribute to the activation of the national economy."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
