General Electric to pay Eesti Energia €66m penalty for Auvere power plant delay
The handover of Eesti Energia's Auvere Power Plant from the contractor will be delayed until October 2017 as a result of which General Electric (GE) is to pay the state-owned energy group a penalty of 66 million euros.
Eesti Energia and the contractors — Alstom Estonia AS, GE Power Sp.z o.o and Alstom Power Systems — signed an interim agreement on Thursday concerning the handover of the Auvere Power Plant, Eesti Energia announced on Friday.
General Electric will by July 2017 at the latest build new bag filters for the Auvere plant to ensure that it complies with dust emission norms even when working at full capacity. The power plant has been producing electricity since May 2015 and will continue working at load levels with which dust emissions stay within allowable norms while the filters are being installed.
"The interim agreement with GE is a sign of good constructive cooperation to resolve problems," Eesti Energia CEO Hando Sutter said.
Eesti Energia is continuing to work together with GE to bring dust emissions into line with norms, Sutter said. "We have mapped out a detailed plan according to which the new bag filters will be finished by next July," explained the CEO. "After the completion of the construction work we'll initiate all the necessary tests again and if the tests are passed successfully we will be able to accept the power plant from the builder. GE has pledged to deliver the power plant by October next year."
Sutter underlined the fact that even though the acceptance of the power plant has been delayed, its cost will definitely not surpass the projected 638 million euros. "The cost of building the bag filters will be covered by the main contractor and the penalty will ensure that Eesti Energia will not suffer any other losses through the delay," he said.
According to the interim agreement, GE will pay Eesti Energia a penalty of 66 million euros by July 2017 which will cover the 12-month period from November 2015 to November 2016. The parties have also agreed on the method of further penalty calculation until the delivery of the power plant.