Energy Power Plant

Brief

In 2008, an Energy Plant Owner entered into a lump-sum, turnkey engineering, procurement and construction contract with an energy contractor for the design and construction of a 300-megawatt solid fuel-fired power plant near Porto Quetzal, Guatemala. The power plant was scheduled to start construction efforts in spring 2010 and begin operations in mid-2013. The plant consists of two units and can be operated with coal fuel and/or petroleum coke, with the capability to run on 100% coal and up to 60% petroleum coke.

Throughout the project, the energy contractor failed to timely perform its engineering, procurement, and construction work, leading to lengthy unexcused schedule delays. In 2013, after the energy contractor failed to achieve the scheduled take-over dates, the  Owner terminated the energy contractor for default.  The Owner retained several subcontractors to complete the work post-termination. Both units were ready for commercial operations in mid-2015.

What we did

HKA was retained by outside counsel on behalf of the Energy Plant Owner to assist in resolving the dispute. Our experts analysed the Owner’s claims, as well as analysis and rebuttal of the energy contractor’s delay and disruption claims. The energy contractor’s claims purportedly resulted from late site handover, delayed basic design approval, customs delays, visa delays, and other alleged owner-responsible impacts.

HKA also analysed and confirmed the reasonableness of the Owners’s post-termination estimate to complete and schedule to complete. In July 2015, we testified at arbitration hearings in Dublin, Ireland before a three-member International Chamber of Commerce (ICC) tribunal.

Outcomes

In 2016, the ICC arbitration panel ruled in the Energy Plant Owner’s favor, awarding over $300 million to the Owner and effectively zeroing out the energy contractor’s $875 million in counterclaims. As part of the reward, the Owner recovered all of the liquidated damages amounts to which it was contractually entitled and recovered approximately 95% of its claimed re-procurement costs.

HKA’s analysis helped to show that the energy contractor’s delay and disruption claims were almost entirely unfounded.