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Interserve faces £72m claim for Glasgow waste job

27 November 2018 | By Neil Gerrard

Image: www.viridor.co.uk

Waste firm Viridor expects Interserve to pay out £72m over a troubled Glasgow energy from waste contract.

The target cost of the Glasgow Recycling and Renewable Energy Centre was originally £155m and completion was originally set for 2016 but Viridor issued a notice of termination to Interserve in November that year after failing to complete the job on time or on budget.

Doosan Babcock replaced Interserve on the contract in early 2017.

In a trading update issued today, Viridor’s parent company Pennon Group said that the job had required a higher level of remediation and expenditure than predicted, driven by the “high level of non-conformances that have required rectification for work performed by our previous engineering, procurement and construction (EPC) contractor”.

It said it was working to recover incremental costs from Interserve, and that discussions over the contractual settlement continued.

The gross receivable from Interserve was £72m and after taking into an account an assessment of market indications of credit risk for Interserve, Pennon Group has made a provision of £8m, making a net receivable of £64m as at 30 September 2018, the company said.

Pennon added that its Glasgow energy from waste plant, along with plants at Beddington and Dunbar are now all processing waste, with operations expected to ramp up over the next 18 months.

Last week, Interserve revealed that its year-end net debt could be as high as £650m, which it put down to continued cash outflows related to its troubled energy from waste contracts.

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