By signing the Contract amendment INPP gains the essential project management tools, minimizes project non-completion risks and solves the disputes that led to the suspension of the Project implementation and were arisen between the Enterprise and the Contractor.
By the Project B2/3/4/ Contract amendment both Parties agreed on:
The set of final Project implementation schedule and milestones in the new Project B2/3/4 Program of Performance according to which the INPP will have possibilities to control the project implementation process. INPP will be able to perform monthly control of work and to assure duly and timely Program of Performance implementation by the Contractor;
Contract Implementation Supervising Body that will supervise on time Project implementation and will help to solve disputes between the Parties arising during the implementation of the Project B2/3/4;
Mother Company’s guarantee provision, assuring the Contract implementation in case of the Contractor’s withdrawal from the Project or failure to implement it;
Payment procedure for the money covered under the Contract, that will actuate the Contractor for duly and timely work performance and Project B2/3/4 implementation on the entire scope.
Claims control procedure for unforeseen risks that may arise during the Project implementation.
The Contract amendment covers total payments of 55 million EUR for the Contractor; the release of will directly be linked to the Program of Performance. Monthly payments will be related to the work progress according to the Program mentioned above. The Project will continue to be funded by the European Union funds.
After signing the Contract amendment the Project will continue to be implemented by the same Contractor. The Contractor obliged to implement the Project according to the Program of Performance foreseen in the Contract amendment and following the monthly payment schedule directly linked to the Program of Performance; ensuring further constructive Project B2/3/4 implementation in the highest manner.
Moreover, the Contract amendment will help to avoid historical legal dispute proceedings leading to further Project B2/3/4 delay and increase of INPP decommissioning costs. By concluding the Contract amendment INPP eliminated risks related to the European Union funds allocation (allocated funds suspension or released payments acknowledgment as unsuitable and possible need to refund it (in case of contract termination)).
According to the Contract to date, the Project B2/3/4 had to be completed by November 2009.
On 1 December 2013 the Project B2/3/4 implementation was on 78 months delay. The Contractor raised financial claims and the Project implementation was practically suspended at the end of 2009. The negotiation process between the INPP and the Contractor regarding historical Contractor’s claims was initiated at the beginning of 2010 and continued until the Terms of Agreement were signed on 29 March 2012; however, the Project B2/3/4 Contract amendment has not been signed. Negotiation process regarding Contract amendment was initiated again in spring 2013 in order to assure the fastest possible Project implementation and to resolve all disputes between the INPP and the Contractor.
It is worth noting that actual Program of Performance according to which the Contractor would be obliged to implement the Project did not exist until the Contract amendment mentioned above was signed. Without the Program of Performance the Enterprise had no contractual enforcement mechanisms for Project B2/3/4 implementation under which the Contractor would be motivated to complete the work on time; i.e., INPP had no bases to claim for interests. The work was carried out slowly imposing minimum workforce by the Contractor. The situation had a negative influence on final decommissioning plan implementation and endangered the European Union funding for the above mentioned Project or other related shutdown or decommissioning projects.