A MAJOR energy-from-waste plant is facing serious delays as legal moves have started to sack the construction firm working on the multi-million pound project.
Interserve, the main contractor involved in the Glasgow Recycling and Renewable Energy Centre (GRREC), has been told its deal with the plant’s operator, Viridor, faces being ripped up over three years into the build.
Viridor said Interserve had “repeatedly failed to meet contracted delivery milestones”.
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Although the plant is part of a deal with Glasgow City Council there will be no hit on the public purse. However, it is unclear by how long completion will be delayed.
The move comes as it emerges Interserve’s chief executive is to step down from his role next year, as the company warned that “significant risks” from the troubled waste contract remain.
The FTSE 250 company announced earlier this year it had set aside £70 million to address the “deterioration” of its contract to build the Glasgow gasification plant, which it said were caused by technical issues.
It also told the Stock Exchange its Polmadie problems led to net debt coming in £35m higher than previously announced.
The plant, which will eventually deal with 200,000 tonnes of Glasgow’s rubbish annually, has been under construction by Interserve since 2013.
But with Interserve, which employs almost 80,000 people worldwide, saying it expects further cost overruns and delays, Viridor has moved to sack the firm.
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It said with Interserve “now reporting a forecasted failure to meet a contracted long-stop construction completion date, Viridor will commence a contractual process to terminate its contract” with the firm.
Alan Cumming, capital projects director for Viridor, said: “Whilst commissioning is now well underway, our contractor Interserve has continually and repeatedly failed to meet delivery milestones. Viridor has made every effort to avoid this highly regrettable action.
“That said, against a backdrop of Interserve continuing to report further delays, Viridor is no longer able to tolerate further impacts on this important environmental project.
“We are liaising with key stakeholders to encourage Interserve to offer every support to their employees and affected supply chain. Following formal legal termination of our contract with Interserve, we will move to implement a full, professional delivery team, mitigating where possible impacts on the existing supply chain.”
Interserve has also been contracted to build Viridor’s Dunbar energy-from-waste plant at East Lothian, on which construction began in July 2015. This is unaffected by the legal action.
In a statement to the Stock Exchange, Interserve confirmed it had been served with a “notice of termination”, adding: “We are assessing the implications of this development with our legal advisers and will issue a further update in due course.”
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The Polmadie project, reportedly worth £254m between Viridor and Glasgow City Council, was signed off in 2012 amid local opposition. It has been billed as “radically overhauling the way the city’s household waste is managed over the next 25 years”.
Viridor has said the plant will save the city cash by diverting material from costly landfill,will boost recycling and generate enough energy to power 22,000 households and heat the equivalent of 8,000 homes.
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