The completion of Interserve’s £145m energy-from-waste plant in Derby could be delayed by up to a year following the insolvency of one of the contractor’s key suppliers.
Interserve’s partner on the project, waste management specialist Renewi, revealed that the project had experienced a “number of major challenges” as a result of the insolvency of Interserve’s EfW technology supplier, Energos, in July 2016.
As a result, Renewi said the Mechanical Biological Treatment (MBT) facility in Derby may now not be fully operational until 2018, despite its original completion date being set for March 2017.
In 2014, Interserve signed a £950m public-private partnership contract to build and operate the facility as part of a joint venture with Shanks, which became Renewi after a merger with Belgian waste firm Van Gansewinkel last year. The construction costs for the Derby plant are estimated at £145m.
EfW technology supplier Energos went into administration last July citing “cashflow issues caused by contractual disputes with two main contractors”.
The Warrington-based company was Interserve’s main technology supplier on a number of its EfW sites, including Derby and the troubled Glasgow Recycling and Renewable Energy Centre plant.
Revealing the delay in its preliminary results report, Renewi said: “The Derby facility has been impacted by the previously reported insolvency of a major contractor and technology supplier to Interserve, the EPC contractor.
“This insolvency has caused material delay of up to a year to the project, which was due for commission in March 2017.”
The company added that Interserve was working to implement a recovery plan and many aspects of the construction were on time and on budget, but it still did not expect the plant to be operational until late in the financial year ending April 2018.
The report also revealed that the financial implications for Renewi had amounted to a total of £3.4m, with the company being hit with £1.7m in liquidated damages and a further £1.7m of exceptional costs.
In August 2016 Interserve announced moves to exit the energy-from-waste market after problem contracts forced it into a £34m half-year loss.
Then in February this year the firm revealed that the costs of exiting the sector had ballooned to £160m.
The lion’s share of these were attributed to Interserve’s contract with Viridor to build the Glasgow Recycling Centre.
The contractor had been served with a termination notice from the client in November 2016 after it claimed Interserve had “continually and repeatedly failed to meet delivery milestones”.
A day before the notice, Interserve chief executive Adrian Ringrose announced he would step down from his role, ending a 13-year reign.
The termination notice came a year after Interserve had its civils contract on a £120m EfW project in Kidderminster cancelled, with the project’s main contractor Hitachi Zosen Inova citing significant delays.
Following the release of Interserve’s full-year results, which saw the company post a £94m pre-tax loss, Mr Ringrose admitted that the firm would shrink its construction arm.
Interserve declined to comment.