Daewoo E&C receives 387.1 billion won for Morocco project
The Safi coal-fired power plant in Morocco under construction. / Courtesy of Daewoo E&C
By Jhoo Dong-chan
Daewoo Engineering and Construction (Daewoo E&C) is expected to collect a total of 387.1 billion won ($320 million) in construction fees for the fourth quarter from Morocco’s Safi Energy Company for building a coal-fired power plant in the country, the constructor said Thursday.
Safi Energy Company paid 66 billion won to Daewoo E&C in October, 159.3 billion won in November, and is expected to pay 161.8 billion won by the end of December to mark a total of 387.1 billion won in accordance with shipments of various materials, the completion of deliveries and progress in construction work.
According to Daewoo E&C, it initiated the Safi Independent Power project this year, but payment for the construction had not been made for several months because specific procedures were not completed.
The project, which was projected to boost Daewoo E&C’s overseas sales, caused some trouble due to the delayed payments, which amounted to 290.5 billion won as of the end of the third quarter.
But the Seoul-based builder said that the delay is in line with the contract and should not be a source of concern.
“Some came up with worries that Safi Energy Company delayed the payment of construction fees, the misunderstanding was due to their lack of knowledge of the contract structure,” a Daewoo E&C official said.
“Under the contract, we should bear the burden of costs before specific procedures are finished. Only then, Safi Energy Company is supposed to pay the funds to us and the firm has kept the schedule as amply demonstrated by its fourth-quarter payment in due time.”
He said that the remaining payments are also expected to be made in full by next year in accordance with the progress.
Daewoo E&C clinched its largest-ever power plant order from Morocco in August.
Under the deal, the Korean builder agreed to carry out the project’s engineering, procurement and construction (EPC), which is generally referred to as a turnkey operation, worth about 1.9 trillion won.
Through the mega-sized project, a 1,320-megawatt coal-fired electrical power plant and its additional facilities are scheduled to be built 15 kilometers from the coast of Safi, Morocco.