Delays on US coal plant project hit Aker profits
12 Oct 2010
London – Delays have forced Aker Solutions to reverse previously reported third quarter profits on its Longview Power coal-fired power project in the US, which is scheduled to be completed in mid-2011.
According to Aker Solutions, its project work has been delayed, and costs increased, due to “force majeure events”, changes to the project, and third party actions by suppliers of engineering services, equipment and materials.
As a result, the group’s process & construction (P&C) business area will report slightly negative earnings before interests, tax, depreciation and amortisation (EBITDA).
The Longview project was awarded to Aker Construction, Inc., formerly Aker Kvaerner Songer, Inc., an indirect subsidiary of Aker Solutions ASA, in January 2007, in a consortium with Siemens Energy, Inc., formerly Siemens Power Generation, Inc.
The consortium contracts total combined value is around $1.1bn, with Aker Construction’s individual contract valued at approximately $654m.
“The situation is highly unfortunate, and we are working closely with our client, partners and vendors to find good solutions. There is uncertainty with regard to remaining work and the financial outcome of the project,” said Øyvind Eriksen, executive chairman of Aker Solutions.
Back in 2007, Longview Power LLC, part of GenPower Holdings LP awarded an Aker Kvaerner Songer Inc./Siemens Power Generation Inc. consortium, a series of contracts for the engineering, supply of equipment and construction for the Longview project – a supercritical pulverised coal-fired generating facility in Monongalia County, West Virginia.
Foster Wheeler North America Corp. won the contract to supply the boiler for the plant, which was expected to be one of the cleanest and most efficient coal-fired plants in the US. The project was scheduled to begin February 2007, and take 48 months to complete.
Longview is also designed to use bituminous coal from Western Pennsylvania and West Virginia. It is expected to generate 695 net megawatts of electricity using a Siemens Steam Turbine and air quality control system.
