GE seeks arbitration over Lungmen payments

14 December 2015

General Electric (GE) has formally started arbitration action against Taiwan Power Company (Taipower). The US company is seeking to resolve a payment dispute related to work carried out during construction of the Lungmen nuclear power plant.

Lungmen 1 and 2 460 (Taipower)
Lungmen (Image: Taipower)

In an 11 December statement, Taipower said GE filed for arbitration against it with the Hong Kong branch of the International Chamber of Commerce (ICC) Court of Arbitration in September.

GE has requested payment for work completed under the contract to provide the two reactors at Lungmen, but Taipower has yet to determine the exact amount of the payment due, Taipower vice president Chai Fu-feng was reported as saying by the Taipei Times.

"Taipower would not refuse the payment, but it is withholding payment because evaluation and timing of the payment issues are yet to be resolved," Chai was quoted as saying.

An earlier negotiation process between the two companies failed to reach a resolution.

Taipower said a hearing on the case cannot be held until arbitrators have been chosen for each side and a third party selected to preside over the hearing. It did not disclosure the amount of the payment GE has requested.

Construction work began on the two 1350 MWe Advanced Boiling Water Reactors (ABWRs) at Lungmen - Taiwan's fourth nuclear power plant - in 1999, with the first originally scheduled to enter commercial operation in 2006 and the second in 2007. However, the project has been beset with political, legal and regulatory delays.

Taipower's initial plan had been to secure one main contractor for engineering, procurement and construction of the units, but this failed and instead it awarded separate contracts to GE for the nuclear reactors, Mitsubishi for the turbines and various other contractors for the remainder. In 2011 Taipower was criticised by the national regulator, the Atomic Energy Council, for its management of the difficult arrangement.

When the two reactors were about one-third complete, a new cabinet cancelled the project and triggered a year-long delay that eventually ended with a government resolution in favour of construction. This hiatus, plus project management and engineering problems, pushed up the projected cost.

In April 2014, the government announced that unit 1 of the Lungmen nuclear power plant would be mothballed once pre-operational safety checks are completed. These checks were eventually completed in July this year. Construction of unit 2, meanwhile, was suspended immediately. A referendum to decide the plant's fate is not expected for up to another three years.

The government has said that, until the referendum is held, no more money will be invested in the plant's construction. Almost NT$300 billion (over $9 billion) has already been spent building the plant.

Researched and written
by World Nuclear News

Filed under: Construction, Contracts, Taiwan