Romgaz Faces Renewed Delays with €268 Million Iernut Power Plant Project
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Despite being nearly complete, the 430 MW combined cycle power plant in Iernut, Romania, faces yet another setback, with a new completion deadline set for December 31, 2026. The project, initially launched in 2016, has been plagued by contractor issues and is now facing concerns about the degradation of installed equipment due to prolonged delays.
Romgaz, the state-owned energy company, informed investors on Monday that the contract with Spanish firm Duro Felguera has been terminated for a second time. While the plant is approximately 98% complete, “on the last hundred meters it was decided to terminate the contract,” according to sources familiar with the situation. This decision stems from the protracted timeline and the resulting deterioration of some installations.
The original completion date was slated for 2020. The repeated delays and contract terminations raise questions about the project’s viability and the effective management of public funds. A senior official stated that Romgaz specialists are “skeptical about completing the investment this year,” despite the newly established deadline.
A Troubled History: Contractual Issues and Corruption Allegations
The Iernut power plant project has been marred by controversy since its inception. In 2016, Romgaz awarded the contract, valued at €268 million plus VAT, to an association comprised of Duro Felguera and Romanian company Romelectro. The scope of the contract encompassed the design, equipment delivery, construction, and commissioning of the 430 MW combined cycle gas turbine plant.
However, concerns were immediately raised regarding Duro Felguera’s involvement. Reports surfaced indicating the Spanish company was under investigation in Spain for a corruption case with ties to Venezuela. “HotNews.ro showed at the time of signing that Duro Felguera was under investigation in Spain in a corruption case that stretched to Venezuela,” highlighting the initial red flags surrounding the contract. Romelectro, also part of the initial consortium, later entered insolvency.
Romgaz initially terminated the contract with Duro Felguera in 2021, citing “the constant violation of the contractual obligations assumed by the Association, it not completing the works within the set deadline” of December 26, 2020.
A Second Chance – and Further Delays
In a surprising move, Romgaz re-engaged Duro Felguera in the spring of 2024 to resume work. The rationale, according to the company, was that approximately 90% of the project was already completed, and selecting a new contractor would introduce further delays. As of the end of July 2024, Romgaz reported that “the total progress of the execution of the investment” reached approximately 91%.
Despite this renewed effort, the project has once again stalled, leading to the latest contract termination and the extended deadline of December 31, 2026, as approved through the National Investment Plan. Romgaz shareholders, with the Ministry of Energy holding a majority stake, have repeatedly approved postponements to the plant’s completion.
The repeated setbacks and the decision to re-hire a company previously implicated in a corruption investigation underscore the challenges facing Romania’s energy infrastructure development. The Iernut power plant’s protracted journey serves as a cautionary tale of project management complexities and the importance of due diligence in large-scale public investments.
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