$44M Maritime Link dispute heading to arbitration
Fired Spanish company Abengoa SA wants $44M in penalties back
An Emera subsidiary building the $1.5-billion Maritime Link hydroelectricity grid is locked in a dispute over $44 million in penalties collected from a contractor it fired for non-performance.
The spurned contractor, Abengoa SA of Spain, has filed formal notice it wants its money back.
Nova Scotia Power Maritime Link (NSPML) says its entitled to more money in penalties.
The case is headed to an international arbitration hearing in Halifax. No date has been set.
Why this affects Nova Scotians
Nova Scotia Power customers have a big stake in the outcome since ratepayers are on the hook for $1.55 billion in Maritime Link project costs.
Nova Scotia is guaranteed 20 per cent of the electricity produced from the Muskrat Falls hydro project and in return consumers here will pick up 20 per cent of the cost by paying for the Maritime Link grid to bring it into the province. Those costs are being built into power rates.
Inside a $44M fight
NSPML hired the Spanish energy company to build the 400 kilometres of overhead transmission lines through Newfoundland and at its landfall in Nova Scotia.
Abengoa was fired for non-performance in June. Seven months earlier, it had filed for pre-insolvency creditor protection in Spain, owing creditors €9 billion ($12.5 billion Cdn).
In a recently released quarterly report to the Nova Scotia Utility and Review Board, NSPML lawyer Rene Gallant said Abengoa fell behind early and needed constant pushing.
"They were resisting getting work moving on the construction site because they didn't want to build up any more accounts payable obligations."
Gallant said Abengoa's financial problems threatened to derail the end-of-2017 completion deadline.
"We finally decided we'd had enough, that we we're running out of time to meet that date and we called the line of credit. We ordered Abengoa to stop all work."
Abengoa fires back
NSPML was able to collect $44 million in contract security. That included $38.5 million from an Abengoa line of credit and $5.5 million from a performance bond.
In August, Abengoa issued a formal notice of dispute objecting to their treatment by NSPML.
"Objecting to our call on their security," Gallant said. "And took the position that we should repay them all of this money."
Now both sides claim the other owes them money.
"And so we'll go through the arbitration process," Gallant said in a conference call with regulators and Nova Scotia Power customer representatives .
The 3rd-quarter report updates the project to the end of September 2016.
Other revelations from the report include:
- The legal bill is not in, but lawyers in Washington, New York, Madrid and Toronto were on the clock to monitor the Abengoa situation and collect on security.
- NSPML created an independent account run by a trustee to ensure local suppliers working on the Martime Link got paid and not Abengoa creditors in Europe.
- NSPML is in negotiations with 50 Cape Breton lobster fishermen for compensation for fishing grounds that will be lost during the 2017 season where the electric cable makes landfall at Point Aconi.
- Despite claims in early November from Nalcor CEO Stan Marshall — developer of Muskrat Falls — there is "no negotiation" between Nalcor and Emera about changing the terms of their energy agreement for the Maritime Link.