Costs soar by £95m at former Interserve energy plant

Grant Prior 6 years ago
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The developer of an energy from waste plant in Glasgow is in “ongoing” discussions with original contractor Interserve after costs rose by £95m to £250m.

Viridor’s parent company Pennon confirmed the current state of the job in a trading statement.

Pennon said: “The Glasgow ERF is in final commissioning. Completion of the construction has required a somewhat higher level of remediation than previously anticipated following the need for contractor change.

“Overall expenditure is expected to be £95 million higher than the original £155 million target.

“Viridor is contractually entitled to recover incremental costs from the original principal contractor, Interserve, under certain circumstances.

“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.”

Interserve had its contract on the job terminated in late 2016 when it was replaced by Doosan Babcock.

The Glasgow job was at the heart of a series of Interserve profit warnings sparked by problems in the energy from waste sector.

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