Taxpayers face €23m bill as council settles dispute over pipeline
Published 10/08/2010 | 05:00
TAXPAYERS have been forced to pay €23m to settle a dispute over a giant underwater pipeline which ended up costing almost €100m, the Irish Independent has learned.
The submarine pipeline in Dublin Bay was designed to bring wastewater from north Dublin to be treated in the new Ringsend wastewater plant.
However, a dispute arose over who was responsible for a delay of almost one year in completing the 11.5km pipeline under the bay.
After an arbitration process that lasted five years, Dublin City Council eventually agreed to a €23.35m settlement with the contractors -- the famous British firm Alfred McAlpine and Dutch dredging firm Tideway.
The settlement is one of the most expensive payouts ever from an arbitration process for a local authority.
A spokesman for Dublin City Council said that the settlement had been assessed to represent "the best value for public money".
The €100m final bill included €10m on consultancy payments and legal costs.
Alfred McAlpine and Tideway had originally submitted a claim for €43m extra due to the costs incurred by delays to the pipeline project.
There were problems during the construction and installation of the pipeline, which was made up of giant steel pipes 1.4 metres in diameter and weighing 25,000 tonnes in total.
The problems included the discovery of a 17th Century shipwreck on the seabed in 2001, which forced the firms to redesign and realign the pipeline route.
The €23.35m settlement approved by the council accounted for just over half of what had been claimed by the firms. It also included their legal and arbitration costs from the protracted negotiations.
However, the council could not provide a breakdown of how much was spent on legal costs.
It meant the council's payment to the pipeline contractors increased from the original fee of €61.6m to €84.6m.
When other costs were paid, including €10m on consultancy payments and legal costs, the final bill for the pipeline came to €97.1m.
The Dublin submarine pipeline project began in 2000 and was completed in 2003 in time for the opening of the new wastewater treatment plant in Ringsend -- which has been credited with dramatically improving the water quality in Dublin Bay.
But the outcome of the long-running arbitration process -- which took place afterwards -- has only been revealed now.
It is not known who was to blame for the cost overruns because the council has refused to release the arbitrator's report, saying that it was confidential to the parties involved.
"We are not at liberty to divulge the details of proceedings or to supply any of the documentation associated with it," the council said.
The Department of the Environment said some of the findings of the arbitration process were in favour of the council and some were in favour of the contractors.
"In some instances -- where the arbitrator found in favour of the contractor on points of principle -- he did not determine the quantum (size) of the costs involved," the department said in a statement.
The council then had to enter negotiations with McAlpine and Tideway to agree the final settlement.
The council justified its decision to pay out the settlement: "The final review, on which the agreement to the final settlement was based, concluded that the settlement represented the best value for public money," it said.
However, the council also refused to say if it paid for the €23m settlement out of its own budget, which would have meant less money was available for other vital council work such as road repairs and social housing.
The Department of the Environment could not say yesterday if it had paid for the settlement through a special grant.
When asked if it had carried out a review of its handling of the case, the council said that the issues at stake were "under continuous review" during the arbitration.
Tideway and Carrillion PLC (which has since taken over Alfred McAlpine) could not be contacted for comment on the matter.