Polimex Mostostal resigned from further construction of the coal block in Azoty in Puławy and called on the company to pay the remaining remuneration, i.e. over PLN 189 million. According to the company's statement, Azoty has two weeks to do so. In turn, according to Azoty Puławy, Polimex's withdrawal from the contract is unjustified.
Polimex Mostostal announced on Thursday that the consortium consisting of: Polimex Mostostal, Polimex Energetyka and SBB Energy has submitted an offer to Grupa Azoty Zakłady Azotowe Puławy declaration of withdrawal from the contract for the construction of a complete heating and condensing power unit based on coal fuel in Puławy, due to the fault of the ordering party, with effect on the date of delivery of the letter.
Request for payment
At the same time, the consortium called Grupa Azoty Puławy to pay the remaining remuneration under the contract, i.e. PLN 189 million 159 thousand. PLN 547.50 within 14 days from the date of delivery of the summons.
The Management Board of Polimex Mostostal explained that on October 24, 2024, due to the deteriorating financial situation of the Azoty Puławy Group and its lack of cooperation in the implementation of the contract, indicating the lack of the Puławy Azoty Group's ability to meet its obligations to pay the contractual remuneration, an to Grupa Azoty with a request to provide a guarantee of payment of remuneration under the contract within 45 days from the date of delivery of the request. This deadline expired on December 9, 2024.
On Thursday afternoon, Grupa Azoty Puławy confirmed in a stock exchange announcement that it had received a declaration of withdrawal from the contract. The company emphasized that throughout the entire contract implementation period it cooperated with Polimex in order to complete the investment. “(..) The Company considers the actions taken by the Contractor to be unjustified and will take appropriate steps to enforce its interests“- announced the company.
December 6 this year Grupa Azoty Puławy announced that it had provided the consortium leader, Polimeks-Mostostal, with a bank guarantee for the guaranteed sum of PLN 2.3 million to secure the timely payment of remuneration for the remaining construction works covered by the contract. The company emphasized that it aims to develop a plan with Polimex-Mostostal to complete the investment in the construction of the power unit.
This bank guarantee, in the opinion of Polimex Mostostal supported by legal opinions, does not constitute a payment guarantee. About which – as Polimex pointed out – Azoty informed us on December 9, 2024.
Polimex Mostostal withdraws from the contract
Polimex Mostostal emphasized that due to the position of Grupa Azoty Puławy, submitted to it on December 10 and 11, 2024, indicating – in the opinion of the coal block contractor – the lack of willingness to provide it with a payment guarantee in accordance with the demand, and also due to the fact that lack of warranty is an obstacle to carrying out construction works, decided to withdraw from the contract for reasons related to the investor.
Azoty previously noted that the completion of the investment was repeatedly postponed by Polimex Mostostal. The original date of the contract concluded in 2019 provided for the completion of the unit in the third quarter of 2022. Subsequent schedules were for June 2023, the end of September 2023, then mid-December 2023. In January this year. the schedule sent by the contractor indicated that the unit would be put into operation in October 2024. In September this year. the deadline was postponed again – this time to April 2025.
Puławskie Azoty also informed that the original contract for the construction of the power unit was worth PLN 1.16 billion net, and the total project budget was PLN 1.2 billion net. The investment contractor made two claims for an increase in remuneration.
Penalties for investment delays
On October 18, 2024, Grupa Azoty Puławy delivered a debit note to Polimex Mostostal in the amount of over PLN 358.9 million. She added that this amount is the maximum limit for penalties for delays in the implementation of the investment, i.e. failure to meet the deadlines for key milestones: “Synchronization of the Unit with the National Power System” and “Signing the Commissioning Protocol”.
The company then demanded payment of contractual penalties within 7 days of delivery of the note. On October 28 this year, due to the contractor's failure to settle due claims, Grupa Azoty Puławy demanded payment of the total amount of PLN 106 million from bank guarantees – issued by Bank Gospodarstwa Krajowego and Bank Ochrony Środowiska as security for proper performance of the Contract. “The maximum guarantee amounts have been paid from bank guarantees,” Azoty added.
November 5 this year The account of Grupa Azoty Puławy received nearly PLN 106 million in guarantees from Polimex Mostostal related to the construction of a coal unit in Puławy and “for the proper performance of this contract”.
One of the largest fertilizer producers
Grupa Azoty Puławy is one of the largest producers of nitrogen fertilizers in Polandalso produces melamine. The company belongs to Grupa Azoty – the second producer of nitrogen and multi-component fertilizers in the EU. It also produces polyamide, OXO alcohols, plasticizers and titanium white. Grupa Azoty is a joint-stock company in which the State Treasury owns 33%. shares.
Polimex-Mostostal implements investments in Poland and abroad for the energy, petrochemical, gas and environmental protection industries. According to the information posted on the company's website, 64 percent shares of the company belong to Enea, Energa, PGE, PGNiG Technologies – investors who act together and in concert.
Main photo source: Grupa Azoty/Sławomir Kłak