Punj Lloyd subsidiary commences legal action against SABIC Petrochemicals

12-Jan-09

Infrastructure company Punj Lloyd's UK subsidiary - Simone Carves Ltd., has commenced legal proceedings against SABIC Petrochemicals for restitution of 28.5 mln Pound Sterling in respect of bonds called by SABIC. Two kinds of bonds were called by SABIC : an advance payment bond and a performance bond. SCL had contracted with Huntsman Petrochemicals Ltd. of UK (which was later acquired by SABIC) in 2006 to design and build a polythene plant at Wilton in the UK. This contract was entered into between SCL and SABIC prior to acquisition of the former by Punj Lloyd in May 2006. After completion of the initial phases of the plant, the nature of the contract was changed by SABIC. SABIC recently terminated the contract on the basis that SCL failed to complete the contractual work with due diligence, among others. This allegation is denied by SCL on the basis that the project is significantly complete. SABIC has called the performance and advance payment bank guarantees issued by SCL amounting to 28.5 million Pounds. Additional costs and damages will also be sought by Simone Carves against SABIC associated with cost overruns in the project caused by changes in scope and design requested by the latter and also to recover damages for losses arising as a consequence of the termination of the contract.