The 910 MW coal-fired unit at the Jaworzno III Power Plant, built at a cost of over PLN 6 billion, was delayed in November 2020. In June this year. was shut down due to faults currently being repaired by contractors from the Rafako-Mostostal Warszawa consortium. In accordance with the original schedule of repair work agreed a few months ago, The block was to be put into operation by February 25, 2022. Parallel to the repair work, mediations between Tauron and the block’s contractor were conducted with the participation of the General Prosecutor’s Office.
On November 3, Rafako and Tauron announced that the terms of the settlement had been agreed between the consortium of Rafako and Mostostal Warszawa and the company Nowe Jaworzno Grupa Tauron, which belongs to the Tauron Group – the terms of the settlement were initialed at that time, and on Thursday – as Tauron announced in the announcement – it was formally signed before the Arbitration Court at the General Prosecutor’s Office of the Republic of Poland. Now the settlement will be submitted to the competent court for approval.
“After the settlement concluded before the mediator is legally approved by the court, the settlement becomes legally binding,” Tauron informed. The consortium’s remuneration agreed in the settlement for the performance of additional services and works, the purchase of a license for the workshop documentation of the boiler and the repair of the block will amount to a total of PLN 91 million; after meeting certain conditions, it is also possible to commission further works for PLN 23 million.
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The provisions of the settlement concern, inter alia, changes to the material and financial schedule as well as the framework schedule of the contract, including changes to the date of re-synchronization of the unit in Jaworzno until April 29, 2022 and the end date of the transition period until October 30, 2022. The settlement stipulated that the consortium would perform additional services and work beneficial for the company NJGT, the effect of which will be, among others lowering the costs of the future operation of the unit.
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On the other hand, the company from the Tauron Group undertook not to charge contractual penalties prior to the settlement date and not to pursue this claim in the future. – on condition that “the investor process is completed, consisting in the effective and unconditional acquisition of control over the stake of Rafako SA shares, currently owned directly and indirectly by PBG SA under restructuring, by another investor and proper performance by the consortium of all obligations provided for in the contract to be performed by October 30th 2022 “. – the end of the transitional period is to be confirmed by a special protocol by mid-November next year.
NJGT will be granted a 12-month warranty for new elements and elements repaired during the current shutdown. In the event of a delay in the timing of the block of more than 60 days due to the consortium’s fault, the NJGT company from March 31, 2023 “will be entitled to withdraw from the contract and enter into the rights and obligations of the consortium resulting from contracts with key subcontractors”.
It was established in the settlement that “at this stage, it is not possible to determine the responsibility for the failure of the unit on June 11, 2021 and for defects diagnosed during the shutdown period of the unit”. In addition, the parties agreed that NJGT would acquire a license for the boiler workshop documentation, and agreed on a method of sharing the cost of repairing the block.
The entry into force of the settlement agreement and its annexes will take place after the fulfillment of the conditions precedent, among which the key ones are, inter alia, obtaining by the parties the necessary corporate consents and consents of financial institutions that provided financial security for the contract.
The company Nowe Jaworzno Grupa Tauron, owned by Tauron, is one of the signatories of the letter of intent signed in October concerning the potential formation of a consortium aimed at the acquisition of Rafako shares by PFR Towarzystwo Funduszy Inwestycyjnych and Polimex Mostostal. The role of NJGT in the consortium will involve examining the risks related to Rafako’s situation in the context of the repair of the 910 MW unit in Jaworzno, but Tauron will not be financially involved in this process. Tauron had previously informed that it was not planning any capital involvement in Rafako, the contractor for the block and was repairing it.
In June this year, during the block’s current shutdown, the necessity to repair essential parts of the boiler was diagnosed. Repair works, carried out in the area of the furnace chamber, are expected to restart the unit and permanently improve the operation of the unit in the long term. Working at full capacity, the unit in Jaworzno will be able to produce about 6.5 terawatt hours of electricity per year, using up to 2.5 million tons of coal. Ultimately, the block in Jaworzno will reach a technical minimum of 37 percent.