Avertas Kwinana delayed a year

The $700 million Kwinana Waste to Energy plant being built by Acciona will not be ready until March 2023, as more details about the legal battle around the project come to light.

Last week, Business News reported that contractor Acciona had lodged a bid in the Supreme Court to declare force majeure for its contract with Avertas for the Kwinana project.

That was partly because of the state’s border settings stopping skilled workers entering.

While the project was initially expected to be operational by late 2021, Business News can reveal it is now expected to be complete by March 2023, according to an agenda briefing note for members of the Rivers Regional Council.

That will mean local governments which had contracted to supply the plant will for now continue to send about 400,000 tonnes per annum to landfill.

The two main supply contracts are with the City of Kwinana; and the local governments represented in waste authority Rivers Regional Council, which includes the City of Armadale and City of Mandurah.

“Delayed completion of the Avertas Energy facility in Kwinana will not have major implications for the City of Kwinana,” City of Kwinana mayor Carol Adams told Business News.

“The city will continue to dispose of its general waste to landfill until the Avertas Energy facility is operational, with the city’s waste management contracts allowing flexibility in this regard.”

Rivers Regional Council chief executive John McNally said it was a complicated project, and that there were alternatives for the waste in the interim.

“We’re confident the owners will get the issue sorted with Acciona as soon as possible,” he said.

The delay will also affect the 36 megawatts of baseload power the Kwinana plant was to supply to the grid.

Court battle

Last week, Business News revealed the lawsuit had officially surfaced in the Supreme Court of WA, four months after being lodged in New South Wales.

At the centre of the lawsuit is the engineering and construction contract Acciona was awarded for the Avertas Energy project in 2018.

The development, a joint venture between Macquarie Capital and Phoenix Energy, was set to take three years to construct and be operational by 2021.

But now Acciona’s industrial and construction arms, along with its wholly-owned subsidiary John Beever Australia, are suing project owning entity Kwinana WTE Project Co to get out of the contract.

The action hinges on the COVID-19 pandemic and the state government’s subsequent border closures meeting the definition of a force majeure event, a term that protects Acciona from liability in the face of an unavoidable catastrophe that affects its ability to fulfill its obligations.

Business News can now reveal the Acciona entities mounted the legal claim on three fronts, any one of which it claims constituted a force majeure event.

According to the originating summons, obtained by Business News, the company has asked the court to issue a declaration that the COVID-19 pandemic and the declared national emergency met the definition of a “force majeure event” under the contract.

Further or alternatively, it wants  an order that WA’s subsequent border closure constituted a “blockade or embargo” under the contract and was enough to fulfill that definition.

It also claimed the spread of COVID-19 would classify as a biological contamination event, which it claims is also enough to get out of the contract.

On top of that, the companies have sought the coverage of legal costs and any other relief the court deems appropriate.

 Last week, the court was told the action would rely on various state government documents that “affect the passage of persons to WA”, which lawyers for Kwinana WTE claim is an area of potential factual controversy.

While travel under the state government’s strict border arrangement may have created additional paperwork and “hoops to jump through”, Kwinana WTE’s lawyers argued that it did not prevent people from crossing the border, especially workers.

The parameters of the action are expected to be finalised in court next month, with a three-day provisional hearing expected to proceed in June.

The Kwinana WTE project was one of several WA-based projects the company had in the pipeline, including the Bunbury Outer Ring Road, the $253 million Bayswater Station upgrade and the other waste-to-energy project in East Rockingham.

Acciona will need to argue the case for why the force majeure applies to one project but not the others.

Avertas Energy could not be contacted for comment.