Nalcor Energy’s Muskrat Falls project team and representatives for contractor Andritz Hydro were going back and forth on paper, using increasingly heated language to describe work at the site in 2014, 2015 and into 2016.
The dispute was previously reported when it hit the courts, but evidence presented at the Muskrat Falls Inquiry Friday added more background and details, including on settlement.
Andritz was awarded a contract package in January 2013 covering the supply and installation of powerhouse and spillway hydro-mechanical equipment. The company made use of a handful of subcontractors.
Andritz started hearing from Nalcor Energy’s project team, including general project manager Scott O’Brien, about “serious concerns,” eventually moving to “total dissatisfaction” with progress. There were allegations from O’Brien in 2015 of floundering and failures in terms of planning, obtaining materials, and getting equipment and personnel on site fast enough, all dragging on the project schedule and adding cost.
On the other side of the coin — as Andritz project manager Bill Mavromatis testified — the contractor claimed it was negatively affected by delays in other contractors’ work, with unexpected “red taped” areas impeding work flow, congestion of personnel, and other issues with site conditions. Overall project scheduling was also a problem, with the company saying Nalcor had no basis for its contractor criticisms.
It all came to a peak as the contractor faced a notice of default from Nalcor Energy and the company filed a statement of claim for unexpected costs, challenging what it considered Nalcor’s attempt to “unilaterally” decide a new schedule for the contract package.
There were mediation meetings in Toronto and a $58-million settlement for Andritz eventually followed, Mavromatis confirmed, in November 2017. The deal included agreement on a schedule for the work still ahead on the powerhouse.
“It was tight for us, but I think everybody there gave blood, so to speak,” he said of the financial agreement and getting back on the same page on the schedule.
“Things are going very well, in my opinion, on the second phase,” he said about the improved relationship.
There are other commercial issues now outstanding. Commissioner Richard LeBlanc is being provided a confidential exhibit wherein Andritz will set out the work it still has to complete and the company position on any unresolved commercial disputes.
Rush to sanction
Consumer Advocate Dennis Browne spoke to reporters following the hearing Friday.
“The word that permeates the project thus far is rush. There was a rush to sanction, a rush to financial close, there was a rush to get to Muskrat Falls,” he said, offering his view on recent testimony.
“We heard from the workers who were there at the site at the time of a lack of preparedness, of a lack of scheduling,” he said.
Browne said the province and Nalcor Energy weren’t really ready for financial close on the project, but went ahead with it anyway.
He said the former Progressive Conservative government issued Nalcor Energy a “blank cheque” for the project.
The inquiry is now on a break from public hearings, resuming May 2, continuing Phase 2 witnesses. But the Muskrat Falls project will be raised in the interim, during Nalcor Energy’s annual general meeting, scheduled for April 9 at 10:30 a.m. at the Holiday Inn on Portugal Cove Road in St. John’s.
The project is also expected to be talked about as the provincial government brings down its next budget, on Tuesday, April 16.
The Muskrat Falls Inquiry (Phase II)