Contractor Decmil has announced it has completed its works on the Sunraysia solar farm in NSW, which were at the centre of a legal dispute with part-owner Maoneng Australia.
Decmil was awarded a $277 million engineering, procurement and construction contract for Sunraysia, a 255-megawatt solar project at Balranald, in the Riverina district, in October 2018.
The contract was awarded by Maoneng Australia, which had a long-term equity partnership with global infrastructure investor and manager John Laing Group to invest and develop Sunraysia.
The project was tipped to be one of the largest solar plants in Australia at the time and scheduled for completion in 2020.
By December 2019, however, the project had stalled, with Decmil notifying the market it could not obtain completion sign-off over Sunraysia’s alleged inability to secure registration from the national energy operator.
Despite having completed the physical works necessary, Decmil claimed the contract could only be satisfied after gaining an R1 registration to sell energy to commercial customers.
Sunraysia refused to grant the company’s request for an extension of time, which it claimed it was entitled to under the contract, prompting it to take legal action.
The dispute moved to arbitration proceedings in early 2020, with Decmil claiming it was fully confident it will in time recover the full amounts it was allegedly entitled.
R1 registration was attained in December 2020, according to the company.
How much the dispute could cost Decmil is unclear.
It estimated it would negatively affect the group’s cash position by about $14 million in December 2019 when it first flagged the matter.
Decmil commented further on the dispute in its 2021 annual report.
“Whilst the company expects a favourable outcome on these disputes, in the event that it is unsuccessful in its claims, it may be required to settle liquidated damages and/or other amounts payable,” Decmil said in the statement.
“Decmil may be able to cover these amounts through legal or contractual revenue.”
The parties reached an interim commercial agreement in August 2021, advising that the arbitration of the dispute between Decmil and Sunraysia Solar Farm will be deferred until after completion has been achieved on the project.
At the time, completion was expected in late October 2021.
In December 2021, Decmil announced it had completed regulatory testing at the farm and that it was well progressed to obtain substantial completion.
Substantial commencement was then deferred from October to January 2022, which has been announced today as at February 4 following receipt of Substantial Completion Certificate from the client.
Decmil said the transition will now facilitate a transition into the five-year operation and maintenance contract.
Chief executive Dickie Dique said it marked a significant milestone.
“The transition to performing the operations and maintenance contract aligns perfectly with the transition in our overall business strategy from turnaround to returning to recurring revenue and maintenance contracts,” he said.
Decmil shares closed today’s trading session down 1.67 per cent at 30 cents.
