Image: www.viridor.co.uk
Waste firm Viridor is in discussions with Interserve, its original contractor on the troubled Glasgow waste-to-energy plant, after revealing the construction cost of the facility is likely to overrun by £95m.
The overrun came after a “somewhat higher level of remediation than previously anticipated”, according to a statement from Viridor’s parent Pennon Group.
The target cost of the Glasgow energy recovery facility, which is part of Viridor’s portfolio of energy plants, was £155m. Completion was originally scheduled for 2016.
Pennon said that Viridor was contractually entitled to recover incremental costs from the original principal contractor, Interserve, “under certain circumstances”.
It added: “Discussions with Interserve are ongoing with regard to the contractual settlement.
“Dependent upon the conclusion of those discussions, margins over the life of the project to 2043 could potentially be lower than originally expected, although we do not believe there is any immediate impact on earnings.”
Doosan Babcock replaced Interserve on the contract in early 2017 after Interserve was issued with a notice of termination on the project by Viridor in November 2016, after failing to complete the job on time or within budget.
The move followed a trading update in May 2016 in which Interserve announced it would have to make £70m of cost provisions against the delayed contract, which it said had “significantly adversely impacted” its expectations for the UK construction division as a whole.
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