Romgaz scraps contract for Romanian power plant

Romanian state gas supplier Romgaz announced on April 6 it had terminated a turnkey contract for constructing the Iernut combined-cycle gas turbine plant issued to Spain's Duro Felguera (DF) and Romania's Romelectro.

Contractual obligations were not fulfilled on time, Romgaz said in a stock exchange filing. The company is now determining how much progress has been made, in order to take steps to complete the project, it said.

DF and Romelectro won the contract for the 430-MW Iernut station in 2017, later hiring General Electric to supply its turbines. The project was hailed as Romania's largest public investment in conventional power in 20 years.

The plant's launch has been repeatedly delayed, however. In November last year, Romgaz reported receiving the second 115mn lei ($28mn) tranche of state funding for the project. Romania's energy ministry has agreed to provide a total of 321mn lei, and issued a 21mn first tranche in 2018.

Romania produces around 20-25% of its electricity from gas and around the same amount from coal. But some of its coal-fired capacity is facing closure because of stricter EU emissions standards coming into force and the mounting cost of EU carbon permits. The government wants to replace some of this capacity with gas-fired generation.