Decmil, the lead contractor for one of the country’s biggest solar farms, the 200MW Sunraysia facility in south-west NSW, has confirmed it has taken a $9.7 million write down on the value of its contract, and in turn has initiated proceedings against inverter supplier Schneider.
The dispute involving Decmil, the Sunraysia solar farm owners John Laing and Maoneng, and the inverter supplier Schneider arose from the delays and registration for the solar farm, which is still working through its commissioning process.
Such delays – and disputes – have been a regular feature of the Australian market given the sheer scale of new wind and solar projects, and the many changes to connection rules and the complexity of modelling.
However, few disputes come into the public domain, and the one around Sunraysia only does so because two of the parties – Decmil and the UK-based John Laing – are listed entities and need to make full disclosure to investors.
In its latest annual result posted on Thursday, Decmil says the dispute in relation to the “head contract” is ongoing, and confirmed that a “moratorium” or stay of proceedings had been put in place pending the full commissioning of the solar farm, now expected in October after the final “hold point 3” testing is complete.
It says the dispute concerns claims for extensions of time, variations, payment of liquidated damages, return and reinstatement of security and claims concerning alleged defects. Decmil claims the deduction of liquidated damages, recourse to security and set-off is wrongful.
“Separately, Decmil is advancing claims against Schneider Electric in an arbitration, which has commenced, in respect of Schneiders performance of the Supply Agreement.”
It says: “In so far as it is determined that the inverter supplied are defected (and therefor a concurrent delay) then Decmil will claim the loss suffered … under the supply contract.”
Following the Sunraysia problems, Decmil has followed other EPC contractors out of the market and focused only on lower risk “balance of plant” contracts.
It recently completed $151 million of projects on the Yandin and Warradarge wind farms in Western Australia, a $21 million contract for the Crookwell wind farm in NSW, and a $51 million for the balance of plant works at the Ryan Corner wind farm in Victoria.
Decmil says that without the Sunraysia write down its net result for the year (it also builds roads and other infrastructure) would have been a $1.8 million loss, but the write down sent it to a bottom line loss of $11.5 million.