Interserve face £64m claim from waste company

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Waste company Viridor has said it expects to receive at least £64m from Interserve for remedial works on its Glasgow recycling and renewable energy facility

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

Interserve had its contract on the job terminated in late 2016 when it was replaced by Doosan Babcock.

In March this year, Pennon confirmed that overall expenditure for the completion of the centre is predicted 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 its half-year results, Pennon said the figure had gone down but that Interserve still owed it £64m.

Pennon said: “High levels 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.”

Further possible recoveries on the waste project remain dependent on future facility performance.

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