SINGAPORE (THE BUSINESS TIMES) - Keppel Corporation announced Tuesday (May 31) that wholly-owned subsidiary Keppel Seghers Engineering Singapore (KSES) has commenced arbitration proceedings against the Qatar Public Works Authority (PWA).

KSES, a wholly-owned subsidiary of Keppel Infrastructure Holdings, on Tuesday filed a request for arbitration with the International Chamber of Commerce in Paris.

The arbitration is for claims arising from a December 2007 contract, under which PWA appointed KSES for the design, build, operation, and maintenance of the Doha North Sewage Treatment Works project in Qatar.

The claim amount is currently estimated to be approximately 457.7 million Qatari rial (S$172.6 million) with interest.

The amount does not include KSES' claim for prolongation costs and other delay-related costs under the contract, which are to be ascertained subsequently.

KSES expects the arbitration proceedings may take at least three years to complete.

The project, which comprised sewage treatment, water reuse and sludge treatment facilities, was handed over in phases to PWA.

PWA in July 2020 terminated the contract with KSES, while the project was in the operation and maintenance phase.

The termination came as PWA implemented a new framework contract to operate and maintain the sewer network and its associated assets in the State of Qatar.

Keppel said it is KSES' intention to continue to engage PWA in amicable settlement discussions to resolve the claims after the filing of the request for arbitration.

The arbitration is not expected to have any material impact on Keppel Infrastructure's operations and financial performance in the current financial year.

Further, Keppel Corp said it does not expect the filing of the request for arbitration to have any material impact on its earnings per share and net tangible asset per share for the current financial year.

Shares of Keppel Corp closed 11 cents or 1.6 per cent higher at $6.89 on Tuesday, before the announcement.