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Liens on Muskrat Falls hydroelectric contractor soar to $34 million

   October 5, 2018        743        Rob Antle

Financially troubled contractor Astaldi says it plans to pay suppliers who are owed tens of millions of dollars for their work on the Muskrat Falls hydro megaproject, and is in discussions with Nalcor Energy over “extra cost” related to its work in Labrador.

“The Canadian operations of Astaldi are independent and do not fall under the credit composition process Astaldi has filed in Italy,” Astaldi media contact Giuliana Paoletti said in an email to CBC News on Thursday afternoon.

“Therefore, the intent is to pay all outstanding amounts to creditors in due course. We are also in talks with our client to reach an agreement on extra cost recently incurred during the performance of our works.”

Paoletti did not disclose the amount of money involved in those talks.

“Astaldi has commenced an arbitration and is making all efforts to have issues with Muskrat Falls Corporation determined on their merits,” she noted.

“In any case, Astaldi remains committed to the completion of the project with the cooperation and assistance of Muskrat Falls Corporation.”

The intent is to pay all outstanding amounts to creditors in due course. We are also in talks with our client to reach an agreement on extra cost recently incurred during the performance of our works.– Giuliana Paoletti

Muskrat Falls Corp. is the subsidiary of Nalcor, which oversees the hydro megaproject.

Astaldi has the contract to construct the Muskrat Falls generation facility on the Churchill River in Labrador. This includes construction of the intake and powerhouse, spillway and transition dams, with an 824-megawatt generating station.

According to Paoletti, “[work] at the Muskrat Falls [site] have reached 98 per cent completion and are progressing on schedule.”

Nearly a week ago, Astaldi’s Italian parent company filed for creditor protection “with reservation,” allowing it to carry on operations.

In a press release issued late Wednesday, Astaldi stressed that it is not in bankruptcy, and the creditor protection action was aimed at “guaranteeing its customers the regular continuation of the works in all the construction sites where the group is operating, as well as at protecting the creditors and preserving the corporate assets.”

Continuing to monitor situation closely

Nalcor Energy has declined interview requests for the past week about the potential impact of Astaldi’s financial trouble on the megaproject.

On Wednesday, the Crown corporation reiterated that it continues to monitor the situation closely, continues to pay Astaldi in accordance with the requirements of the contract currently in place, and is committed to ensuring that work continues to progress.

Nalcor officials declined comment Thursday afternoon about the status of talks with Astaldi over that “extra cost” at Muskrat Falls, instead referring back to their previous statements.

Muskrat Falls Corporation is the subsidiary of Nalcor, which oversees the hydro megaproject. (CBC)

Nalcor has stressed that it has performance securities in place that provide financial protections in situations where Astaldi doesn’t meet its obligations under the contract.

The original contract with Astaldi was valued at $1.1 billion, but the company asked for — and received — more money to complete the project two years ago. That deal saw the contract value jump to $1.83 billion.

Overall, the Muskrat Falls project is billions over budget, years behind schedule, and is the subject of an ongoing public inquiry into what went wrong.

Suppliers claim $34M in unpaid bills

Earlier Thursday, CBC News revealed that Astaldi is now facing $34 million in claims from suppliers over unpaid bills related to work at Muskrat Falls.

According to public mechanic’s lien filings, Astaldi Canada owes cash for everything from steel to concrete, to food and cleaning materials.

A week ago, CBC News reported on liens filed by two groups — the umbrella organization for trade unions at the site, and an airline — totalling $12 million.

More companies have since come forward with claims of their own.

Another eight suppliers have filed mechanic’s liens for overdue payments from Astaldi. Those claims add another $22 million to the tab.

The smallest claim is just over $17,000; the largest, more than $17 million.

 ‘It is a lot of money’

Only one of the affected suppliers agreed to speak with CBC News.

Supermetal Structures of Levis, Que., is owed nearly $3.3 million, according to a lien filed last week.

“It is a lot of money, and it is a disaster if we are not being paid or reimbursed that money,” company president and general manager Jean-Francois Blouin told CBC News.

“It’s not going to close our doors, but it’s certainly going to majorly hurt our company if that happens.”

It is a lot of money, and it is a disaster if we are not being paid or reimbursed that money.– Jean-Francois Blouin

Blouin said his company’s work in central Labrador is 99 per cent complete, and Supermetal will continue to perform its duties.

Supermetal has a contract to provide the structural steel — or “skeleton” — for the powerhouse and structures around it, along with some upstream and downstream bridges, according to Blouin.

“We will co-operate with Astaldi and/or Nalcor for the future, for the balance of the scope that we have to do,” he said.

Blouin said Nalcor has reached out to Supermetal to get the company’s point of view and “try to be reassuring for what’s coming up and going forward to complete the scopes and the contracts.”

But he said his company is not party to discussions between Nalcor and Astaldi.

“I know they are talking; they are trying to come up with an agreement for all those liens, going forward as well, but I have really no details about this,” Blouin said.

CBC News