The drawn out dispute between one of Australia’s biggest listed contracting companies, Decmil, and the owners of the 200MW Sunraysia solar farm in NSW is at a standstill, pending the completion of works and commissioning later this year.
The dispute between Decmil and the owners – UK infrastructure investment John Laing (90 per cent) and Australian company Maoneng – first erupted in 2019 following delays in the solar farm’s registration and connection and commissioning.
The news of the dispute, and the potential damages, caused a slump in Decmil’s share price and a decision to follow other major contractors out of the EPC contracting business. Decmil is still involved in the renewable construction industry, but as a specialist contractor.
Sunraysia finally obtained its R1 registration in December last year, about a year after mechanical completion of the project, and Decmil said oil Monday it is currently at hold point 3 stage testing.
Decmil said the legal battle between the parties is ongoing, but proceedings are currently stayed pending “substantial completion” of works due by November 30. This is presumed to be full commissioning at the rated capacity.
The dispute is centred around claims for extensions of time, variations, payment of liquidated damages, return and reinstatement of security and claims concerning alleged defects.
Decmil said in an investor presentation accompanying a new fund raising on Monday that it views the liquidated damages, recourse to security and set-off is wrongful
It also revealed that its fiscal year 2020/21 earnings will be impacted by a $9.7 million reduction to the “accounting contract” position.
It still insists that there are a range of future accounting outcomes to the dispute, between an incremental contract profit (or loss) of minus $19 million to plus $10 million.It says the potential cash settlement in favour of Decmil is between $0 to $29 million.
John Laing, which encountered a number of problems on its portfolio of wind and solar farms in Australia, including connection delays and restrictions due to grid congestion, and big losses on the investments, is in the process of selling its wind and solar investments.
It has already sold its wind portfolio in Australia and has put the sale of the solar portfolio, which also includes the Finley solar farm in NSW, on hold until the Sunraysia dispute is sorted and grid issues are clarified.
Maoneng is continuing with a range of projects, mostly in battery storage, including a contract with AGL to supply 200MW/400MWh of battery storage, including at Sunraysia, and two big battery storage projects in South Australia and Victoria.