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Viridor in arbitration to recover £72m from Interserve

26 November 2019 | By Neil Gerrard

Waste management firm Viridor has started arbitration proceedings to recover the £72m it claims it is owed by Interserve Construction following a dispute over its Glasgow energy from waste plant.

Interserve Construction was contracted to build the Glasgow Recycling and Renewable Energy Centre (GRREC), which was originally set for completion in 2016. But a series of delays and cost overruns meant that in November that year Viridor terminated the deal and brought Doosan Babcock in as a replacement.

Viridor announced in 2018 that it expected Interserve to pay out £72m over the GRREC. Interserve then entered a pre-pack administration in March 2019 and delisted from the London Stock Exchange.

Now, a half-year update from its parent company Pennon Group indicated that Viridor is entering arbitration to try and recover the money.

In a statement it said: “As previously reported, the rectification and completion costs of GRREC exceeded expectations and Viridor are contractually entitled to recover incremental costs from the original principal contractor Interserve Construction Limited.  We have now issued arbitration proceedings to progress legal recovery of the debt. The gross receivable of £72m continues to be recognised and having again considered the assessment of the Interserve credit risk, the cumulative provision of £28.7m remains unchanged from the position at 31 March 2019.”

Interserve declined to comment.

Comments

Does some of the blame not lie with Viridor? In the last 20 years or so, 100s of these plants have been built throughout Europe and they all share the same basic fundamental processes. However every time a new plant gets built it is designed from scratch due to client preferential engineering and quite frankly the aesthetics.
If ever there was a project ripe for modularisation this is it...there are hundreds of examples to serve as an empirical template; covering every conceivable variation on the theme. A modular approach to the design of these buildings would produce greater efficiency and costs savings negating many of the problems similar to this project.
If you need some ideas of how this can be done then get in touch.

H.Thomson, 26 November 2019

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