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CH2M Hill takes £54M hit on power station

CH2M Hill is facing up to major losses on a problem power station contract in Australia.

The consultant is in a 50-50 joint venture with contractor UGL on the facility at the Ichthys liquefied natural gas (LNG) project in Darwin.

The combined cycle power station is budgeted at £345M, but the JV said completing the contract would now cost an extra £107M.

It blamed “a range of project changes and events in the design and procurement stage” for the overrun.

CH2M Hill said it would book a £54M provision in its accounts as a result of the issues.

UGL said it was still reviewing the additional costs and could not yet “reliably measure” the provision.

Ichthys is a £21bn project which involves extracting hydrocarbon liquids from a field located 220km off the north-west coast of Australia. The scheme involves construction of a sophisticated onshore processing facility and some 889km of pipeline.

A spokeswoman for the Ichthys operator, Japanese outfit Inpex, said: “We still remain on schedule for first production to start towards the end of 2016,” she said.

“Projects like ours are massive and have lots of different parts and they can be challenging in different areas.

“UGL is working through its schedule for that particular work and is working on a recovery plan.”

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