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ENERGO: Romgaz terminates contract for 430-MW power plant but seeks to complete project

Romanian natural gas company Romgaz has terminated the €268mn contract for the construction of Iernut gas-fired power plant with the contractor, an association formed by Spanish Duro Felguera and a local partner, and will seek to complete the project by June 2022 either on its own or by finding another contractor.

The company informed investors about the termination of the contract for the 430MW Iernut gas-fired power plant, saying it was “motivated by the non-completion in time, by the executor, of the construction works and commissioning.” The project should have been commissioned in early 2020.

The statement comes two and a half months after Romgaz announced, on April 4, the imminent termination of the contract signed in 2016 with Duro Felguera and Romania’s Romelectro. The decision has been repeatedly postponed.

In the meantime, the government obtained permission from the European Commission to prolong the project until the end of June 2022. The permission was necessary because the government is extending RON320mn (€64mn) state aid for the project.

Romgaz said that it can complete the project on its own, but it is also evaluating options to hire another contractor.

Duro Felguera proposed to Romgaz a calendar for the commissioning of 210MW by the end of the year and the remaining up to 430MW by the end of April 2022, but it also asked for €17mn to cover supplementary expenditures incurred as a result of higher labour costs.

The Spanish company argued that the delay was caused by the pandemic.