Listed contractor Decmil says a dispute with the owner of the Sunraysia solar farm and its inverter supplier is still to be settled, and may yet lead to “substantial financial losses” if not resolved in its favour.
The dispute first emerged in late 2019 and is basically over who should bear responsibility – and the financial cost – of the delays in the 200MW project, which was originally due to be completed in 2019, but was not fully complete until January this year.
The solar farm – majority owned by UK infrastructure investor John Laing, with a small stake held by Australia-based Maoneng – withheld $29 million in payments in the form of “liquidated damages”, and Decmil in turn made a claim of $19 million against inverter supplier Schneider.
See:Â Lawyer’s picnic, and $47m at play, as Sunraysia solar farm faces further delays
The case has been in arbitration and has not yet gone to court. Decmil is the only party providing details about the dispute because it must do so as a listed company.
In the latest annual report and results presentation, Decmil noted that Sunraysia had withheld the “maximum” level of liquidated damages from the $277 million project and Decmil, in turn, is seeking damages from Schneider for delays it says were caused by that company’s equipment.
“This dispute may be resolved on a commercial basis and/or through formal dispute proceedings,” it says in its report. It says it remains confident of the outcome, but this is not certain.
“The timing and the outcome of this dispute is uncertain and may result in the company not receiving amounts which it has forecast or making payments which it has not forecast.
“This may result in significant financial loss to the company or lower than anticipated profit realisation. The Arbitration proceedings against Schneider (downstream) remain on foot.”
Decmil 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 says the deduction of liquidated damages, recourse to security and set-off is wrongful
It says commercial discussions are continuing, along with arbitration, and on the dispute with Schneider a mediation on June 27 “did not reach agreement but progress [was] achieved.”
The dispute over Sunraysia is not unusual – the claims and payments of liquidated damages has occurred frequently given the lengthy delays over multiple wind and solar projects – but most of these disputes occur behind closed doors because few companies are listed.
Most major listed contracting companies have cut their exposure to such claims by refusing to take on full EPC contracts – particularly after the multiple solar contract problems that sank the listed contracting giant RCR Tomlinson – and are focusing only on less risky “balance of plant” contracts.
Decmil has balance of plant contracts with the Ryan Corner and Crookwell wind farms, and is also building one of Australia’s first hydrogen fuelling stations at Fortescue’s Christmas Creek mine.
