Romania: Termination of contract for TPP Iernut issues

, SEE Energy News

Spanish company Duro Felguera, the leader of the consortium that was supposed to build the 430 MW gas-fired unit at thermal power plant Iernut for Romanian natural gas company Romgaz, said that the termination of the contract by the Romanian company does not comply with the contractual terms and conditions, adding that it reserves the right to initiate legal action in defense of its interests.

According to Romanian media, such legal actions are already activated because the termination of the contract activates Duro Felguera’s court action (initiated in April) aimed at deferring the deadline and preventing the loss of the 25 million euros guarantee. The consortium says that it maintains its willingness to complete the works on the project, given the overall completion is at 94 % and Duro Felguera completed 98 % of its part.

After five extensions of negotiation period, Romgaz has finally terminated the contract concluded with a consortium of Spanish Duro Felguera and local Romelectro for the construction of a gas unit at thermal power plant Iernut. The termination comes two and a half months after Romgaz initially announced the imminent termination of the contract signed in 2016 with the consortium.

In November 2016, Romgaz has concluded an agreement worth 268 million euros (without VAT) with a consortium of Spanish company Duro Felguera and Romanian Romelectro for a turnkey project for the construction of new 430 MW gas-fired power plant within its Iernut thermal power plant. The deadline for the completion of the new combined cycle power plant is 36 months from the effective date of the contract, which shall be within 5 working days from the date the NIP financing is approved. Romgaz took over Iernut thermal power plant in 2013 from Bucharest-based thermal energy producer ELCEN in exchange for deleting a 145 million euros debt. Initially, the plant was supposed to be commissioned in early 2020, but delays have arisen, both as a result of disagreements between partners regarding the provisions of GEO 114/2018 and regarding the increase in construction costs.