The longest running (publicly revealed) contract dispute over the construction of a large scale solar farm in Australia has finally been settled after more than two years of stand-offs, counterclaims and arbitration.
The dispute over the 200MW Sunraysia solar farm in NSW – between lead contractor Decmil and owners John Laing and Maoneng – first came to light in early 2020 and centred over the registration and commissioning delays that plagued dozens of large scale wind and solar projects at the time.
The Sunraysia dispute came to prominence because as listed company, Decmil had to update its shareholders, and like many others at the time, it was about who was to bear the burden of any cost over-runs and lost revenues because of commissioning delays.
The nature of these disputes, deepened by frustrations over the connection and commissioning issues, led to many contractors either collapsing (in the case of RCR Tomlinson) or leaving the industry.
The Sunraysia dispute concerned claims for extensions of time, variations, payment of liquidated damages, return and reinstatement of security and claims concerning alleged defects, according to a Decmil presentation.
Decmil claimed the deduction of liquidated damages, recourse to security and set-off was wrongful. It wrote off $9.7 million in early 2020, and later revealed it was facing a claim of up to $28.7 million in liquidated damages from the solar farm owners.
“Decmil is pleased to announce that it has finalised its dispute with Sunraysia Solar Project trust in relation to the Head Contract of the Sunraysia Solar Farm project in New South Wales,” it said in a statement this week.
“The terms of the settlement are confidential, but Decmil can confirm that the settlement amount to be received is in line with its accounts.”
Another dispute, between Decmil and inverter supplier Schneider, was finalised last October, and it means the matter is now behind them.
The experience caused Decmil to limit its focus to “balance of plant” contracts for large scale renewable contracts, rather than full EPC or head contracts. It was just one of a number of big contractors to exit that part of the market.
“This settlement puts to bed a challenging chapter for Decmil and reaffirms the ability of our strengthened executive team to successfully and methodically deal with our legacy issues,” Decmil CEO Rod Heale said in the company’s statement.
He also noted that the Sunraysia solar farm is currently performing at, or above, its performance obligations “demonstrating the high-quality nature of our work.”
For Maoneng, it also brings an end to a series of problems around its operating assets. The small Mugga Lane solar farm in the ACT was put in administration last year because of a dispute around debt arrangements, and has since been sold to CleanPeak Energy.
