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Arbitration panel in India rules favourably on Aecon extension of time claim

Jul 13, 2008

Toronto, Ontario – June 13, 2008: Aecon Group Inc. (TSX: ARE) announced today that the arbitration panel considering the first of two major claims launched by Aecon and its partner in respect of the Nathpa Jhakri hydroelectric project in India has ruled substantially in Aecon’s favour.

The panel awarded Aecon and its partner in the Continental Foundation Joint Venture (CFJV) full extension of time as well as related indirect costs and interest resulting from project delays that the panel agreed were beyond CFJV’s control and contractual responsibility.  In its ruling, the panel also dismissed a counter-claim for liquidated damages filed against CFJV. Satluj Jal Vidyut Nigam Limited, the government agency responsible for the project and Aecon’s client, has until October 12, 2008 to file a court appeal. 

The value of the award to CFJV, less amounts previously paid, is approximately 512 million Indian Rupees (approximately $12.0 million).  Face value of the claim was 1.39 billion Indian Rupees (approximately $32.5 million).  Aecon is a 45% partner in CFJV. 

A further claim of 2.26 billion Indian Rupees (approximately $52.9 million) remains with the arbitration panel and is also expected to be resolved this year.

The Nathpa Jhakri project was a $500 million hydroelectric project in the Himalayan Mountains of Northern India.  Construction, which was substantially completed in 2003, included a 200 ft high dam, a 16 km tunnel and the world’s largest underground desilting chambers.  Construction of the facility began in 1993, and while the project was a significant engineering and construction success, a number of natural disasters in the region delayed construction by over five years.  Other factors in the claim included geological conditions that were significantly different than indicated in the bid documents, and the lack of contractually promised transportation and communication services at the site.

“This award represents a major milestone in our efforts to wind up the remaining issues on this landmark project and bring our profits home,” said John M. Beck, Chairman and CEO of Aecon Group.  “We are pleased that, on balance, the arbitration panel has to date taken Aecon’s view of the key issues.”

Aecon Group Inc. is Canada's largest publicly traded construction and infrastructure development company. Aecon and its subsidiaries provide services to private and public sector clients throughout Canada and internationally. Aecon is pleased to be recognized as one of the 50 Best Employers in Canada as published by Report on Business Magazine.