By Lisa Schick

$37.8M lien placed on Boundary Dam carbon capture project

Apr 27, 2015 | 8:52 AM

Though it’s been operational for several months, money is still being fought over at the Boundary Dam Carbon Capture project. SaskPower could still have to pay millions to one of its contractors, or could get millions back, depending on arbitration.

In 2012, Alberici Western Constructors and Balzer’s Canada Inc., together as AB Western Constructors, were hired for some work on the project involving the demolition and installation of power generation equipment.

In April last year, AB Western registered a builder’s lien on Boundary Dam against SaskPower worth $37,828,355.62. Then it took it to court. SaskPower responded to that claim with a statement of defense and a counterclaim, revealing some of the problems during the approximate year and a half AB Western was on the site.

Cost

AB Western claimed that SaskPower “refused or neglected” to pay what the contractor was owed. SaskPower, however, claimed that not only was no money owed, but it overpaid AB Western for the work. 

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In the counterclaim filed in April 2014, SaskPower said to that date it had paid AB Western a little over $139,390,810. SaskPower says that amount is $111 million too much, due to money it had to spend later to fix problems on the site.

The Crown Corporation said AB Western abandoned the project so it had to find another contractor to come in to fix and finish it at an additional cost of $51.5 million.

The contract set the original target price for the project at $66,680,048.00, according to SaskPower. Because of the problems caused by AB Western, SaskPower says the project will end up costing three-times that. SaskPower also claimed the delays cost it another $40 million in damages.

It could end up costing SaskPower even more money. The Crown Corp’s counterclaim also claimed indemnity from AB Western in case the delays cause SaskPower to default on a contract to provide CO2 to a third party. SaskPower wasn’t willing to say whether this was still a concern.

Delays

Both sides claim there were significant delays in the project, with SaskPower pegging that at about nine months. The plant was originally supposed to open in April 2014, but didn’t actually open until that October. 

In February 2014, SaskPower said some unexpected findings on the power plant side would change the finish date, though we don’t know whether that is, in fact, related to the apparent problems with AB Western. At the time, the Crown Corporation cited design changes and retrofitting delays.

AB Western was claiming for costs, losses and damages it said were caused by the delays. AB Western attributed hold-ups to SaskPower, including issues related to the design, fabrication, and installation of equipment, the discovery of asbestos material, and late delivery equipment furnished by SaskPower.

In its counterclaim, SaskPower said the contractor knew prompt completion of the project was important. SaskPower quoted from the contract: “Increasing cost of replacement power, interest during construction carried on the Project (including all the capture island equipment), and lost revenue on CO2 sales are major costs that SaskPower will be accumulating during the overhaul.”

SaskPower blamed all the significant delays on AB Western, saying it didn’t manage the project or labour properly, and didn’t implement its quality assurance program.

Bad work

In its counterclaim, one of the reasons SaskPower said there were such delays is that AB Western’s work was far below par, and that services were “negligently performed”.

SaskPower stated the level of labour productivity didn’t meet AB Western’s obligation in the contract, or that would be expected from a competent contractor. SaskPower also claimed AB Western didn’t provide reports and project schedules as expected.

SaskPower cited specific problems with the work. Court documents referenced things being built improperly, which SaskPower had to fix later. 

Welding was one example given. It said welds were failing testing at a rate much higher than industry standards, and thus had to be fixed. But it also said the testing on the welds was done improperly, resulting in some being fixed unnecessarily. 

None of these claims have been proven in court.

In March, a judge at the Court of Queen’s Bench in Estevan ruled the two sides would have to go into arbitration to settle the dispute, as per the contract they signed. In April, SaskPower said that process was still ongoing. 

Because it’s before the court, SaskPower declined to comment except to say that things like this are a common part of finalizing such large projects. Calls to Alberici Western Constructors Ltd. and Balzer’s Canada Inc. were not returned.

panews@jpbg.ca

On Twitter: @princealbertnow