Arabian Business reported that a subsidiary of indebted developer Nakheel has won a ruling to demand licensing fees from a transport firm contracted to provide services to troubled offshore island project The World.

Penguin Marine Boat Services which has an exclusive transport contract to ferry goods and people to the islands had asked a Dubai tribunal to release it from an annual licensing fee of AED 5 million arguing the lack of activity on the island made its operations unfeasible.

The firm claimed work on the islands had stalled and that The World had backtracked on a 2008 deal allowing Penguin Marine to construct a port and manage deliveries to the development. Construction on the offshore project ground to a virtual standstill in the wake of the economic downturn which saw real estate prices in Dubai fall more than 60 percent from their peak.

Many buyers on the project have failed to begin work, with the only notable construction work carried out by Kleindienst Group, the developer behind the six island Heart of Europe Project. Nakheel has said that 70% of the 300 manmade islands are sold and that building work is the responsibility of the owners.

In court documents, Penguin said it had spent in excess of AED 20 million on set up and running costs but has been unable to earn anything more than a small amounts of income due primarily to the fact that has not carried out any development and/or infrastructure works.

The court heard Penguin had failed to make any of the annual license fee payments of AED 5 million and was also required to repay the AED 1.86 million advancement fee issued to the firm.

Mr Ali bin Thalith executive of Nakheel said that the claim Nakheel had stopped work on the project was untrue but admitted development had slowed in the wake of the financial crisis. The project is still ongoing and has not been terminated.

(Sourced from www.arabianbusiness.com)