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Romgaz terminates contract with Duro Felguera, Romelectro tie-up for Iernut power plant project

Apr 5, 2021, 11:06:40 AMArticle by Nicoleta Banila
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April 5 (SeeNews) - Romanian natural gas producer Romgaz [BSE:SNG] said that it has terminated its contract with a consortium comprising Duro Felguera and Romelectro regarding the completion of the construction of a 430 MW combined cycle gas turbine power plant in Iernut.

Romgaz terminates contract with Duro Felguera, Romelectro tie-up for Iernut power plant project
Romgaz's Iernut power plant upgrade project Source: Romgaz

Romgaz made the decision because contractual obligations had not been not fulfilled in due time by the consortium, it said in a statement filed with the Bucharest Stock Exchange, BVB, on Friday.

Currently, Romgaz is conducting technical and economic checks to determine the physical and value stage of contract execution, as well as to identify remaining works to be performed, for the completion and enforceability of the investment. Then, the company will make all the necessary steps for the completion of the investment.

In December, Romgaz announced that it would not extend the term for completion of the construction of the Iernut power plant sought by the consortium because the term stipulated in the public procurement contract has not been met and expired on December 26.

In June 2017, US-based multinational conglomerate General Electric announced that it was awarded an order from the consortium Duro Felguera - Romelectro for core technology in the Iernut power plant located in Mures county. At the beginning of November, Romgaz received 115 million lei ($28 million/ 23 million euro) from the energy ministry, representing the second tranche of a government grant for the Iernut project. The financing contract for the project was concluded in 2017, with the ministry committing to offer Romgaz a grant of up to 320.9 million lei. In June 2018, Romgaz received the first tranche of the grant in the amount of 20.99 million lei.

Announced in 2016, the project requires a total investment of 269 million euro ($314.5 million) of which Romgaz is covering 75% and the state is contributing 25%.

Duro Felguera is a Spanish company specialised in the delivery of turnkey projects for the energy, mining and handling, oil and gas, smart control systems, communications, security and defence sectors. Romelectro is a private Romanian company acting as a contractor and having more than 45 years of international experience in the energy area.

Romgaz is 70% owned by the Romanian state, with the balance of 30% in free float on the BVB.

Shares in blue-chip company Romgaz traded 0.60% higher at 33.4 lei by 0933 CET on Monday on the BVB.

(1 euro=4.9106 lei)

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