Contact settles dispute with Siemens

By Mark Reynolds


Contact Energy's new power plant in South Auckland should be up and running by the end of this year, following the resolution of a dispute between Contact and engineering group Siemens.

Remedial work to fix a defective heat recovery generator at the Otahuhu plant has already begun, and repairs could be completed by the beginning of September, a source close to the facility said yesterday. The companies have also settled a number of smaller quibbles over the performance of the new plant that should result in it working at its full 390 megawatt capacity by the end of the year.

Contact will be compensated for the delays in commissioning the plant, which should have been completed by the end of last year.

Contact also raised the dispute with Siemens as a risk factor in its prospectus for the sale of 60 per cent of the company to the public. The prospectus warned that if the dispute continued to be unresolved it could have a material impact on the company's operations and earnings.

The problems with the facility became apparent late last year when it was started up.

Contact's contract with Siemens means it does not pay for the facility until it is in full working order.