Duro Felguera renegotiates terms of its $544 million Djelfa project with Algeria
Duro Felguera talks about his amazing project in Algeria. The Asturian company is preparing to renegotiate with the public company Sonelgaz the contract signed in 2014 as part of the Djelfa project, worth 544 million euros. This is the latest renegotiation of this major contract, which has been paralyzed in recent years by geopolitical tensions. The company admitted these new facts to the National Securities Market Commission (CNMV), where it indicated that it had initiated a “new protocol” with its client, according to which it agreed to “continue to negotiate in good faith for mutual cooperation.” pending claims.”
Information sent to the stock market regulator and included in events after the close of the last financial year (2023). shows that the new scenario will “increase the likelihood that the contract budget will need to be updated.”including an updated estimate of outstanding expenditures, estimates of agreements reached on mutual differences and expected revenues.”
The contract with Sonelgaz, a historic operator in Algeria’s electricity and gas sector, was signed more than a decade ago when a contract was agreed with the Societé de Production de l’Electricité (SPE), a subsidiary of the state-owned group, to build a gas-fired combined cycle power plant in the city Djelfa, located 300 km south of Algeria. This program involved the landing of an engineering team in the markets of North Africa.“a geographic area where significant energy investment is expected in the coming years,” as they explained at the time.
With a lead time of 40 months and a turnkey development formula (EPC, in English), Duro Felguera was to build four gas and two steam turbines, as well as four recovery boilers, at the Djelfa plant.. The power plant was to be the most powerful built by the company to date, with a capacity of 1,250 MW.
The new protocol signed includes an action plan for synchronizing the two aforementioned gas turbines, as well as a forecast of intermediate stages. The protocol also provides for the collection of certain amounts stipulated in the original contract.as well as part of previous claims admitted by the client.
Jaime ArguellesCEO of Duro Felguera, explained at the 2022 shareholders meeting that the company has not yet received 150 million euros from this project. “We hope to resume as soon as possible the dynamic relations with Algeria that we had several months ago.”“- said the top manager, realizing that the diplomatic crisis between Spain and the country affected the implementation of the project.
Unprepared
Duro Felguera explained that given the proximity of the date of the agreement signed on April 24 to the date of preparation of the consolidated financial statements,”The group is unable to define a set of possible outcomes and therefore cannot if it becomes necessary.make the valuation sufficiently reliable to update the provision for an onerous contract that is recorded on its balance sheet.
The Asturian company is assessing the possible consequences of the new protocol and hopes to complete the analysis in the coming months. The most promising forecast is that the findings will be reflected in the financial statements as of June 30, 2024..