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Construction Law/Financial Charges on Late Release of Retention


Dear Florin!

We are Contractor and working under FIDIC EPC 1999. Contract started on 08 April 2013. "Some circumstances lead the delay of overall project by 2 yrs.  The Employer granted us EOT for 1 yr only (in Dec 2015). Say Original Contract Finish date was 08 Oct 2015. Now, new finish date is fixed as 08 Oct 2016. My question is half of The Retention Money which was to be released on 08 Oct 2015 at TOC. I have 3 Question. (1) Is the Contractor entitled to receive Financial Charges on late release of half of the Retention Money.
(2)  Say Contract Amount is 100 m Rs. and Limit of Max Retention Money is 5% of the Contract Amount i.e 5 m Rs. On 08 Oct 2015, 88% of Total Retention Money (4.4 m Rs) was deducted in AIP's. Is the Contractor entitled to claim delay in releasing of that 88% Retention Money. starting from 09 Oct 2015.  
(3)  The Employer has granted 1 yr EOT while 1 yr has not been granted. In other words 50% delay days are admitted on the default of the Employer. On this base, can Financial Charges of late release of Retention Money be claimed starting from mid of the extended period. What amount should be the principal amount 4.4 million or 5 million.
For information plz note , that in n Dec 2015, full 5% Retention Money was reached so no further Retention Money is being Deducted in coming AIPs.


Thank you for your question.

1. I am not sure I understand the entitlement you are referring to, as I have the feeling you were expecting to receive 50% of the Retention Money at the original date when the Taking Over was due, i.e. at 8 October 2015.

But as per Sub-Clause 14.9 [Payment of Retention Money], the first half of the Retention Money is returned to the Contractor, only "when the Taking Over Certificate has been issued".

If you get an extension of time, regardless how long, the moment when you can get back the first half of the Retention Money is also postponed until TOC is issued.

Hence as long as that first half of the Retention Money has been released upon issuance of the TOC, there is late release, hence no entitlement to any Financial Charges.

2. Again, I am not sure I fully understand the question, but again, no Retention Money are to be released until TOC is issued, at 8 October 2016, or at any other date.

3. Please see above, I do not see any late release of the first half of the Retention Money.

Please read these answers and re-analyse your situation. In case I did not correctly understood the case, please come back with a clearer description and will gladly help.

Hope that helps.

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