Meridian in $21m dispute claim

Friday 20th April 2001

By Chris Hutching

State-owned enterprise Meridian Energy was yesterday preparing for dispute negotiations over a $21.7 million claim against FDI, the consortium building the new $200 million Manapouri tailrace tunnel.

Meridian spokesman Alan Seay said the parties were holding the mediation hearing at Te Anau under provisions set down in the original contract to settle such disagreements.

Both sides had expert engineering witnesses who would provide the evidence.

"This is just another stage in that disputes resolution process," Mr Seay said.

"Last year the FDI consortium presented their claims and this is another step in settling it."

After Meridian inherited the project from former state-owned enterprise ECNZ in 1998 the project fell behind schedule. The penalty clauses in the contract are for potential lost earnings.

Provisions in the construction contract provide for delay penalties of $50,000 a day and Meridian claims the tunnel is 434 days behind schedule.

The construction consortium is comprised of Fletcher Construction, US company Dillingham, and Austrian-based Ilbau. Fletcher Challenge is managing the dispute for the consortium. It claims that the rock profile and ground conditions are different from what was tendered for.

But Meridian disputes this because the existing tailrace is only 75 metres away and the tender documents were based on the profile of the existing tunnel.

The tunnel drilling method is different from the blasting and clearing that characterised the building of the first tunnel. Instead, the consortium has used a huge mole machine that looks something from a sci-fi move.

Drilling began at the Deep Cove end of Manapouri and recently the mole broke through to a site near the Manapouri power station.

The drilling machine is now being dismantled and reinforcing work should take another 12 months to complete.

The construction contract is for a fixed price at $200 million and the new tailrace will eventually increase Manapouri's output by 120 megawatt hours, enough to supply a city like Dunedin or 64,000 households. The additional power that will be generated is likely to be used in the Otago and Southland regions where economic growth is rising from dairying and forestry and possibly establishment of silicon and magnesium smelters.

Comalco at Tiwai Point has also expressed interest in the possibility of a long-term power contract.

Meridian is the country's largest electricity generator and the Manapouri tailrace tunnel plus another scheme unveiled last week will significantly increase that market share.

Last week Meridian announced a new $1 billion power and irrigation scheme for the Lower Waitaki River called Project Aqua that will take six years to build and will create 1300 jobs nationally and 600 locally, according to Meridian.

A canal will take a massive 224 to 284 cumecs out of the Waitaki's average flow of 364 cumecs between Kurow and the point where it re-enters the main river at the highway bridge near the coast.

During 2000 Meridian, the country's largest generator reported an annual after tax profit of $96.3 million, 12% above target and providing the government with a dividend of $62.3 million.

It produced 11,974GWh of electricity or roughly 30% of the country's electricity generation.

Comments from our readers

No comments yet