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Power plant in Jaworzno. Tauron and Rafako agreed on the assumptions of the future settlement

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Before the General Prosecutor’s Office, Tauron and Rafako agreed on the terms of the future settlement in the dispute concerning the power unit in Jaworzno. On the date of entry into force of this agreement, the parties will waive each other’s claims over and above those covered by the settlement, according to the companies’ information.

Rafako was the contractor of a new 910 megawatt Tauron power unit in Jaworzno worth over PLN 6 billion. The companies have been arguing for many months over problems in the operation of this unit. As part of mediation with the participation of the General Prosecutor’s Office, on February 7 this year. the parties announced the conclusion of a preliminary agreement, announcing the conclusion of the settlement by March 8; later, the deadline was postponed by two weeks. On Monday, it was announced that the assumptions to the terms of the settlement had been agreed.

Who will give the money to whom?

It was agreed that Tauron would receive PLN 240 million from bank guarantees for the proper performance by the Racibórz-based company of the contract for the construction of a 910 MW unit in Jaworzno, subject to a prior agreement between Rafako and the guarantors. – Tauron Wytwarzanie will limit its claims against the contractor (Rafako – PAP) and the subsidiary to the amount of PLN 240 million, which amount will be paid from the performance bond for the performance of the contract – this agreement does not mean that the contractor and the subsidiary accept Tauron Wytwarzanie’s claims – Rafako said in a Monday statement. – The amount due to Tauron under the contract performance guarantee, agreed by the parties during mediation, will cover the costs of repairing the identified problems of the unit. We are in the process of developing plans for target solutions that will allow for stable operation of the 910 MW unit, commented Trajan Szuladziński, President of Tauron Wytwarzanie. According to him, the developed assumptions allow for such a scope of repairs to be carried out so that the unit will work with greater efficiency in the long term.

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In Rafako’s communiqué, it was noted that arrangements had been made regarding the assumptions of the future settlement, “however, no settlement was signed between the contractor, the subsidiary and Tauron Wytwarzanie, the content of which is the subject of further work by these entities”.

Details of the settlement between Rafako and Tauron

The settlement – after its final signing – is to enter into force after the fulfillment of conditions precedent. They include e.g. obtaining the necessary corporate approvals by all parties. In addition, by April 24, Rafako must also conclude an agreement with the guarantors regarding the immediate payment of PLN 240 million to Tauron Wywarzanie. On the side of the Racibórz-based company’s obligations is also the adoption by the General Meeting until April 24 of this year. resolution on increasing the share capital and reaching a settlement regarding the Lithuanian investment carried out by the company from Racibórz. After the conclusion of the settlement – ​​for the period intended for the fulfillment of the conditions precedent – ​​the performance bonds are to be extended at least until April 28th 2023. Under the settlement, Tauron Wytwarzanie is to pay Rafako a total of over PLN 65m, including i.a. PLN 10 million, for taking responsibility for all claims of subcontractors involved in the construction of the 910 MW unit, as well as PLN 14 million, primarily for the non-contractual pool of additional parts, the purchase of the site of the construction office, as well as workshop and calculation documentation. Tauron will also settle payments for inventoried and accepted works according to their level of advancement, the total value of which (PLN 32.5 million) corresponds to the actual advancement of these works.

Rafako will also release subcontractors from any obligations that make it difficult to start cooperation with Tauron Wytwarzanie. The parties will terminate the contract by expiring contractual obligations, and Tauron will release Rafako from its obligations under technical guarantees. The funds that Tauron will receive for improper performance of the contract will ensure increased availability of the unit, which directly translates into the security of the national power system and the economics of the unit’s operation, Tauron said. According to the company’s energy information, from September this year, i.e. from the moment of taking over the operation of the unit by Tauron Wytwarzanie, the 910 MW unit worked stably and generated nearly 2.5 thousand. MWh of energy. In December last year, in a difficult period for the National Power System, the unit was 100% available – then the record for the monthly production volume of the unit was broken – the unit generated over 455 thousand. MWh of electricity.

Dispute between Tauron and Rafako

The dispute between Rafako and Tauron escalated at the beginning of this year. On January 11, Tauron summoned Rafako to pay over PLN 1.3 billion in contractual penalties and damages. Rafako challenged Tauron’s claims in their entirety, announcing that it intends to file for bankruptcy. On January 13, Rafako filed claims with Tauron for the total amount of PLN 857.6 million. Tauron considered these claims unjustified. As a result of mediation with the participation of the General Prosecutor’s Office, on February 7 the parties announced that they would refrain from pursuing mutual claims until March 8 this year. – until then, they planned to sign a settlement in which they would determine the schedule and method of completing works on the unit. The deadline was later extended by two weeks.

February 7th the parties agreed that the contract for the 910 MW unit will be completed no later than by the end of this year, while the parties’ joint liability for the performance of the contract will be limited to the amount agreed in the negotiated settlement. The unit in Jaworzno was launched with a delay in November 2020. In June 2021, it was shut down due to faults. The unit was restarted – also with a delay compared to the original plans – at the end of April 2022. After that, the unit was temporarily turned off twice more. According to Rafako, the reason for the failure was the inadequate quality of coal supplied by Tauron. According to Tauron – the reasons are numerous defects and faults of the block.

Main photo source: tauron.pl

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