Scottish Water has been accused of presiding over "a huge waste of public money" after it emerged that an 18-month project management failure, exposed by the Sunday Herald, had still not been resolved.

In May, this newspaper revealed that the publicly owned utility had been forced to abandon work on a new three-mile treated water pipe in Angus, having failed to agree a standard indemnity agreement with BP, owner of the Forties Pipeline System (FPS).

Scottish Water needs permission, and an insurance deal, for a "crossing" of BP's pipeline, which lies on the projected route of the utility's new outfall pipe running from Kirriemuir sewage works to the River Dean, near Glamis.

Scottish Water, which has already invested £2.6 million in the partially built pipeline, has repeatedly said that a resolution to the stand-off was expected "in the very near future". However, it has emerged that the source of the impasse is the quango's own failure to respond to the standard indemnity figure offered by BP in relation to its asset.

The BP Forties System, a key feature of Scotland's economic infrastructure since the 1970s, carries up to 500,000 barrels of oil a day - half of the firm's North Sea daily production - from BP's terminal at Cruden Bay to the Grangemouth refinery.

A spokesman for the oil giant said: "The ball is in their court. The situation has been rumbling on for about 18 months and we're still waiting to hear back on the indemnities. It's not really a problem for us, as we won't do anything until the indemnity has been agreed."

James Kelly MSP, Labour's infrastructure spokesman, has tabled a parliamentary question on Scottish Water's apparent failure to undertake basic due diligence with infrastructure owners along the route of the pipe - which also include Shell and the National Grid - before starting work on the project and exposing the taxpayer to unnecessary cost risks. He also called on Deputy First Minister Nicola Sturgeon, who has infrastructure as part of her portfolio, to intervene.

Kelly said: "As it stands, this project seems to be another huge waste of public money. That proper due diligence was not undertaken in the first place on such a large scale is concerning.

"Everyone knows that public finances are under pressure, so when large-scale projects do move ahead they need to do so in the most efficient way possible, not be stuck in limbo over a completely avoidable issue."

Declining to comment on the level or the timing of the indemnity offer, a BP spokeswoman said: "Because of the cargo of oil that goes through as there are very big consequences if FPS is damaged, say by a digger, in terms of the environment as well as to the production that FPS supports in the North Sea.

"That is why we have a very strict set of rules about crossings and they are fairly uniform. We have basically told Scottish Water the indemnity level we would require and we are waiting to hear back from them."

Asked if it was unusual for a company to start work before concluding negotiations, the spokeswoman said. "For any project you would normally get approvals in place before you proceed."

Scottish Water has declined to rule out abandoning the project if negotiations on the extent of its accent liabilities break down, although observers have noted that the amount of investment to date suggests they are unlikely to do so.

A spokesman for the quango declined to answer questions on why it proceeded with the project before settling the indemnity figure.

The spokesman said: "The pipeline crossings will proceed. The exact timetable will be determined once technical agreements have been concluded to the satisfaction of all parties.

"This is ongoing and we are confident our customers in the area will soon enjoy the benefits of the improvements to waste water services.

"We have a major investment programme and undertake hundreds of infrastructure projects across Scotland every year, many requiring liaison with other organisations. Our policy is to commence projects early so that our customers receive the benefits of our improved services as quickly as possible."

He added: "There has been no additional spend on the project since the Sunday Herald query in May."

Kelly's question, lodged on the Scottish Parliament website on Friday, reads: "To ask the Scottish Government what assessment it has made of (a) the progress of and (b) due ­diligence in the pipeline project from Kirriemuir sewage works to the River Dean."