Million dollar pledge to free Marsden B power station

The Marsden B Power Station being dismantled last year. Photo /Michael Cunningham

The dismantled Marsden B power station could be allowed to leave Northport as early as next week if an Indian telecommunications giant follows through with a promise to lodge $1 million into a New Zealand bank account as security in a legal case.

South Pacific Industrial Ltd (SPI) is taking United Telecoms Ltd (UTL) to court, claiming the Indian company owes it $2.5 million after SPI's work on dismantling the mothballed power station took longer, and cost more, than expected because of unexpected asbestos at the Marsden Pt station.

The High Court had put an injunction on UTL shipping the dismantled power station out of Whangarei until the legal dispute is settled, or UTL lodged $1 million into the account of its New Zealand lawyers, and the plant is now sat on the wharf at Northport. UTL had already put $350,000 into the lawyers' account.

The matter went back before Justice Heath this week and in a ruling released yesterday the judge said UTL had given a commitment that it would put another $650,000 into the trust account of law firm Kensington Swan by the end of this week.

Justice Heath said he expected the money to be cleared by May 9 and, if agreement can be reached between the parties on May 9, the freezing order could be lifted, allowing the mothballed power station to be shipped to India.

UTL bought Marsden B power station from Mighty River Power in 2008 for $20.4 million, with the view of dismantling it to take to India to fire it up there. SPI won the contract to dismantle the plant and pack the component parts for shipping to India, and started work in June 2011.

However, work stalled three days later when SPI discovered a greater quantity of asbestos than had been expected at the site. After agreement between the two parties, work continued but a dispute arose as to the amount SPI should be paid for the additional work.

Some of the extra costs were paid by UTL but SPI has lodged a claim for $2.5 million.

SPI's claim will be heard in full by Justice Heath later this year. Marsden B was built in the 1970s adjacent to New Zealand's first major oil-fired power station, Marsden A.