Lack of reliable assessment of project’s rationale, high risk of delays and corresponding liquidity risks due to lack of financing, unavoidable financial penalties which may reach several hundred million PLN - the report of the Supreme Audit Office (NIK) confirms serious problems of Ostrołęka C and undermines rationale for its construction.
On 3 December 2019, the Supreme Audit Office published a report on the audit of the Ostrołęka C project and eight other coal-fired power plants. The conclusions of the report savage Ostroleka C, confirming the concerns of industry experts and social organisations.
It is already well known that Ostrołęka C will be obliged to pay a penalty for failing to meet its obligations due to at least nine-month delay in providing power under its capacity market contract which comes into force on January 1st 2023. As NIK explains, the concluded power agreement obliges the Company to make a certain amount of power available to the grid from January 1st 2023. At the same time, another contract specifies that the unit under construction is going to be commissioned only in September 2023. The investor himself confirms the delay of the investment which will result in an increase in this penalty for each subsequent month. Such penalties could reach almost 10% of CAPEX.
According to the editor Karolina Baca-Pogorzelska, it would be 202,99/PLN/kW/year, i.e. PLN 14.4 million per month, reaching PLN 554 million over a maximum period of three years from January 2023. The delay is already nine months which translates into a penalty of at least PLN 130 million.
The penalty may still increase. As stated by NIK, all the investments under control were undertaken or completed with a delay in relation to the original assumptions, and there were delays at practically every stage of the investment process, from preparation, through selection of the contractor and execution of construction works.
The final cost of the power plant is also in question. Only one of the investments controlled by NIK fit into the expenses assumed before construction. The budgets of all the others were exceeded. This sheds a completely new light on the statement of development minister Jadwiga Emilewicz, who pointed out that the costs of Ostrołęka C may increase from 6 to even 9 billion PLN.
Main conclusions of the audit of the Ostrołęka C power plant construction project: