TRANSPORT AND TECHNICAL SERVICES
LA COLLETTE ENERGY FROM WASTE FACILITY
ENGINEERING PROCUREMENT AND CONSTRUCTION (EPC) CONTRACT
ADVANCED PAYMENT BOND
Purpose of the Report
This report seeks the Minister’s approval of the form of words for the La Collette Energy from Waste Facility Engineering Procurement and Construction (EPC) Contract Advanced Payment Bond.
Background
The Energy from Waste Facility Engineering Procurement and Construction (EPC) Contract was signed and sealed by the Minister of Transport and Technical Services on 14th November 2008.
At the time of contract signature, the Advanced Payment Bond and Performance Bond were not entered into, because the Partner companies to CSBC (Jersey) Limited had not been able to secure approval by the financial institutions to some of the wording of the bonds. However, CSBC (Jersey) Limited signed the contract incorporating wording of these bonds acceptable to the Department.
Discussion
The inability of CSBC (Jersey) Limited to secure guarantors is a direct outcome of the recent upheaval and uncertainty within financial institutions, following the global downturn, under which such financial institutions are increasingly wary of entering into agreements with each other.
The wording of the contract means that the Contractor (CSBC (Jersey) Limited) could proceed under the contract at his own risk, but no payments could be claimed until these bonds were secured.
The banks providing guarantees under the Bonds requested that a mechanism be introduced within the contract to allow the Advanced Payment Bond to be extended if the expiry date was reached before the relevant certificates for take-over of the plant had been issued. The banks had requested a long-stop date be inserted within the bond wording to identify the overall exposure of the Guarantors for this element of security at any particular time and this provision appears sensible to the Department and its legal and technical advisers.
CSBC (Jersey) Limited formally confirmed on 3rd December 2008 that the financial institutions have agreed the wording of the Advanced Payment Bond and that signed copies of both the Advanced Payment Bond and Performance Bond would be issued to the States of Jersey on Monday 8th December 2008.
Once these bonds are received and validated, approved payments must be made by the Department.
Recommendation
The Minister for Transport & Technical Services is requested to approve
(i) a Deed of Variation to the Engineering Procurement and Construction Contract to permit the insertion of a long-stop date to the Advanced Payment Bond within the agreed contract.
Reason(s) for Decision
To enable CSBC (Jersey) Limited to secure an Advanced Payment Bond for the EPC Contract from financial institutions.
Action Required
That the Minister for Transport and Technical Services agree to:
(i) sign and seal the Advanced Payment Bond.
Written by: | Will Gardiner |
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Approved by: | John Richardson |
Supporting Documents (not attached):
1. Advanced Payment Bond
File Ref: 39/8/11
Date: 4 December 2008