UAE's largest contractor downs tools on £400m scheme for state-owned developer, alleging overdue payment

The UAE's biggest contractor, Arabtec, has stopped work on a project because it says it is owed money by the scheme's developer, Nakheel.

The project is one of the Dubai state-linked developer's largest housing developments, involving the construction of 4,000 homes. Arabtec won the 2.3bn dirham (£400m) contract for the first 1,500 homes in June 2008.

Riad Kamal, chairman of Arabtec, told local paper the National that the company suspended work at the beginning of the year after building 550 villas at the development in Dubai. “We haven't been paid, so it's not ongoing.”

Nakheel is owned by Dubai World, which shocked global markets in November by saying it would ask to delay repaying $26bn (£16.9bn) of its debts. Nakheel owes money to UK contractors and consultants, as well as banks and bondholders, and payments are understood to have slowed even further amid the restructuring talks.

Kamal said that no payments had yet come through from the developer since Abu Dhabi's $10bn cash injection for Dubai in December.