Dark clouds over the last coal investment of the Polish energy sector

Dark clouds gather over the construction of a new coal-fired unit at Zakłady Azotowe in Puławy. The general contractor, i.e. Polimex Mostostal, wants to extend the project implementation by 223 days and increase the remuneration. Reason? Coronavirus pandemic and legislative changes.

  • The new unit in Puławy is the last coal investment of the Polish energy sector.
  • In September, Azoty informed about the halfway point of works on the construction site. Now the investment is catching a slippage.
  • Guilty of covid-19 and pandemic-related legislative changes.

The Management Board of Zakłady Azotowe Puławy, which is part of Grupa Azoty, announced on November 22, 2021 that it had received an application from the general contractor to extend the construction of the coal-fired unit, change the work schedule and increase the remuneration.

As we read in the announcement, the contractor, i.e. Polimex-Mostostal, wants to extend the current deadline for the work by 223 days. At the same time, it also wants to increase the salary by PLN 35.8 million and change the project implementation schedule.

As the main reason for submitting the application, Polimex cites the impact of the Covid-19 pandemic on the implementation of the project and legislative changes related to it, which the contractor qualifies as force majeure within the meaning of the contract.

The investor, ie ZA Puław, have not yet responded to the received application. As we read in the stock exchange announcement, “proposed changes to the contract will be subject to detailed analysis and verification of their legitimacy in the light of the provisions of the contract, as well as the facts.”

The last coal investment of the Polish energy sector

Let us recall that Grupa Azoty Zakłady Azotowe “Puławy” concluded a contract for the comprehensive implementation of the investment called “Construction of a coal-based power unit” according to the “turnkey” formula in September 2019. The contractor was then a consortium consisting of Polimex Mostostal, Polimex Energetyka and SBB Energy. The contract value was PLN 1.16 billion net.

However, the history of this investment is longer and marked by numerous twists and turns. As reported by the WNP.PL portal, it was known that old devices are falling apart over a decade ago. It was then that the construction of a new power unit for the company began.

Initially, it was to be a gas block, then a coal block. It was reshuffled several more times; in the end, it was decided to use a coal-fired unit. Its construction started in October 2019. Gross nominal electric power is 99.99 MWe, and the thermal power in fuel is 299 MWt.

The cut-off date for the construction of a new power unit is December 31, 2023 due to the derogations obtained from BAT conclusions for boilers No. 1 and 3, which will be excluded from operation.

Without the new block, the plants in Puławy would most likely be shut down, and moreover, it is to contribute to the heating of the city.

Although the new block has been hailed as the last coal investment of the Polish energy sector, which attracts criticism, the chemical investor does not rule out the inclusion of gas as a fuel in the future.

– Analyzes are being carried out on the legitimacy of making a change in the implemented project, consisting primarily in changing the operation of the OP350 boiler to a unit co-firing gaseous fuel. The facility would ultimately operate on coal, gas and a mixture of coal and gas, and therefore in the most profitable system, informed the editors of WNP.PL Grupa Azoty.

Read more about the history of the investment: Grupa Azoty goes against the tide. The last such investment?

About Eric Wilson

The variety offered by video games never ceases to amaze him. He loves OutRun's drifting as well as the contemplative walks of Dear Esther. Immersing himself in other worlds is an incomparable feeling for him: he understood it by playing for the first time in Shenmue.

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