Interserve ‘still owes £64m’ for Glasgow waste facility completion, claims client

The client which removed Interserve from a contract to deliver an energy from waste plant in Glasgow has said that it still expects to receive at least £64 million from the company for remedial works.

Viridor’s parent company Pennon said in a trading statement today that completion of construction of the Glasgow Recycling and Renewable Energy Centre had required a higher level of remediation and expenditure than predicted.

Interserve ‘still owes £64m’ for Glasgow waste facility completion, claims client

Interserve had its contract on the job terminated in late 2016 when it was replaced by Doosan Babcock. Shortly afterwards it decided to quit the energy from waste sector altogether.

In March this year Pennon confirmed that overall expenditure for the completion of the centre at Polmadie is expected to be £95m higher than the £155m original target.

In its annual results in May, the company said that Interserve should pay £69m of the extra costs.

Now in today’s half year results, Pennon said the figure had gone down but that Interserve still owed it £64m.

Pennon said: “High level of non-conformances have required rectification for work performed by our previous engineering, procurement and construction contractor.

“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 gross receivable is £72m, after taking into account an assessment of market indicators of credit risk for [Interserve], a provision of £8m has been recognised resulting in a net receivable of £64m at 30 September 2018.”

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