Key MRT project contractor goes bust

Downtown Line 2 work faces delay after Austrian builder files for insolvency

THE Downtown MRT Line 2, which will link Singapore's north-western corridor to the new Marina downtown by 2015, is likely to be delayed because a main contractor has gone bust.

Austrian builder Alpine Bau, which was working on the line's King Albert Park, Sixth Avenue and Tan Kah Kee stations, filed for insolvency last week after a failed restructuring plan.

Industry players said the most optimistic outcome would be a six-month slowdown.

"It depends on a number of things," said the managing director of a major construction company. "Like how quickly a receiver is appointed and what it is tasked to do, and if the project is to be re-tendered and how soon that can be done."

The Land Transport Authority (LTA) said there are "legal and contractual matters to be resolved" - a process that it said will take three to six months - before work can resume.

It added that it will work closely with the relevant parties to "minimise the impact" on the project's schedule. But it was unable to say with certainty the likely duration of a delay.

Alpine Bau's plunge into insolvency caught the LTA by surprise.

Its spokesman said yesterday: "Just days before it filed for insolvency, Alpine had given us the assurance and underlined its commitment to complete the station and tunnelling works.

"There had also been no signs of any slowing down of works on site."

The company, which announced its bankruptcy move last Wednesday, has completed about half of the work it set out to do on the three stations and tunnels, said the LTA.

Alpine Bau, owned by Spanish group FCC, won the $670.74 million project in 2009.

Yesterday, it could not be reached for comment at both its Austrian and Singapore offices.

The company, which employs more than 10,000 people worldwide, is Austria's second-largest construction group. It has € 2.56 billion (S$4.3 billion) in debt and equities, reported the Bloomberg news agency, making its insolvency the biggest in Austria since World War II.

According to its website, the company has been trying to restructure its finances for months as it grapples with unprofitable projects in central and eastern Europe.

Up to a day before it announced that insolvency was imminent, the company said its management remained optimistic of a turnaround.

Alpine Bau is relatively new to LTA projects.

Before Downtown Line 2 - part of a three-stage 42km, $21 billion trans-island MRT line - it was involved in building sections of the Circle Line.

The first stage of the underground Downtown Line will link Bugis and Chinatown to Marina Bay.

It is still scheduled to open in the fourth quarter of this year despite a month-long work suspension last year following an accident at Bugis station which killed two workers.