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Cost of Interserve's EfW exit soars

Interserve has revealed that the cost of exiting its problematic energy-from-waste (EfW) contracts has more than doubled to £160m.

2000 interserve logo

2000 interserve logo

The company told the City that the £70m figure announced in May 2016 was no longer adequate to reflect the losses incurred and anticipated through exiting the EfW market.

Problems across the EfW sector had seen its net debt increase from £280m to £390m during 2016 – and that this was now expected to climb to £450m for 2017.

Last year, the company announced it was exiting the EfW sector after a number of its contracts ran into problems.

In November 2016 Viridor served a termination notice on its Glasgow Recycling & Renewable Energy project, saying Interserve had “continually and repeatedly failed to meet delivery milestones”.

The latest trading update said Interserve had consulted its legal advisers about Glasgow and expected “a lengthy period of litigation to ensue”.

The termination came after Interserve had its civils contract on a £120m EfW project in Kidderminster cancelled, with the project’s main contractor Hitachi Zosen Inova citing significant delays.

Interserve’s EfW operations were further dented last July when its main EfW technology supplier, Energos, entered administration.

The company is currently working to complete a £145m EfW plant in Derby, as well as a £50m plant in Rotherham where it is working in a joint venture with Babcock & Wilcox Volund.

Interserve said it expected the construction and commissioning of these two contracts to be completed in 2017.

A statement said: “Managing the challenges of exiting from these projects and of pursuing our entitlements to recoveries and claims from third parties remains the focus for the large, experienced team of commercial, operational and legal experts we have deployed and will remain an area of critical focus for the foreseeable future.”

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