Costs at former Interserve energy plant soar by £95m
The developer of an energy from waste plant in Glasgow said it has been hit by higher-than-anticipated costs for the facility’s construction after having to replace Interserve as the main contractor.
Viridor’s parent company Pennon confirmed in a trading statement on Monday that overall expenditure for the completion of the Glasgow Recycling and Renewable Energy Centre at Polmadie is expected to be £95 million higher than the £155m original target.
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 £95m higher than the original £155m 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.”
The company said margins on the life of the project to 2043 could be lower than initially predicted, depending on the outcome of its contract settlement with Interserve.
However, Pennon does not expect an “immediate impact on earnings” and added that discussions with Interserve are ongoing.
“Viridor is contractually entitled to recover incremental costs from the original principal contractor, Interserve, under certain circumstances,” the group explained.