Decmil hit by contract dispute

Shares in Decmil closed down 9 per cent today after the Perth-based contractor said it was facing a delay in payment of about $14 million owing from its work on the Sunraysia solar project in New South Wales.

The company entered an EPC contract with the developer of the 255 megawatt solar farm in October last year.

It said all physical works on the project had been achieved on time and in accordance with the requirements of the contract, however the contract can only be fully satisfied if the developer obtains R1 registration of the project from the Australian Energy Market Operator, which it is yet to do.

Sunraysia Solar Farm, controlled by Maoneng Australia and infrastructure developer John Laing, has refused to award Decmil with an extension of time and an associated adjustment to the contract date for substantial completion.

Decmil has escalated this under the dispute mechanism of the contract.

The above issues are expected to negatively impact the company’s cash position by $14 million, being the remaining progress payments and completion milestone payments due on the project.

Decmil said the issues, however, would not have a material impact on earnings for the half year ended December 31.

“Decmil confirms it is continuing to support Sunraysia Solar with its R1 registration process, including the performance of additional testing and modelling,” Decmil said in an ASX announcement.

Its shares closed 9 per cent lower at 82 cents.