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Information and public services for the Island of Jersey

L'înformâtion et les sèrvices publyis pouor I'Île dé Jèrri

Energy from Waste Facility - Engineering Procurement and Construction Contract - Advanced Payment Bond.

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A decision made (05/12/2008) regarding: Energy from Waste Facility - Engineering Procurement and Construction Contract - Advanced Payment Bond.

Decision Reference:  MD-T-2008-0116

Decision Summary Title :

Energy from Waste Facility – Engineering Procurement and Construction Contract - Advanced Payment Bond

Date of Decision Summary:

04.12.08

Decision Summary Author:

Will Gardiner - Director Waste Strategy Project

Decision Summary:

Public or Exempt?

(State clauses from Code of Practice booklet)

Public

Type of Report:

Oral or Written?

Written

Person Giving

Oral Report:

n/a

Written Report

Title :

Energy from Waste Facility – Engineering Procurement and Construction Contract - Advanced Payment Bond

Date of Written Report:

04.12.08

Written Report Author:

Will Gardiner - Director Waste Strategy Project

Written Report :

Public or Exempt?

(State clauses from Code of Practice booklet)

Public

Subject:  Solid Waste Strategy – Energy from Waste Facility – EPC Contract Advanced Payment Bond

Decision(s): The Minister for Transport & Technical Services approved 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.

Resource Implications:

There are no resource implications.              

Action required:  

That the Minister for Transport and Technical Services agrees to sign and seal the Advanced Payment Bond.

Signature:

Position:

Date Signed:

Date of Decision:

Energy from Waste Facility - Engineering Procurement and Construction Contract - Advanced Payment Bond.

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

 

 

Approved by: 

John Richardson

 

Supporting Documents (not attached): 

1. Advanced Payment Bond 
 

File Ref: 39/8/11

Date: 4 December 2008

 

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