Govt threatens to step in at project

Press, 9 July 1983, Page 9

Govt threatens to step in at project

PA Whangarei Marsden Point oil refinery expansion site unions and management were warned yesterday that the Government would step in if it believed their actions threatened the 51.5 billion project. The Minister of Energy, Mr Birch, who toured the site yesterday, said that the Government would not stand by while the project was delayed. “The Government is keeping a close watch on the project and will not hesitate to intervene if the success of the project is placed in jeopardy by the actions of any of the parties involved,” he said.

Although his comments were aimed at the management, contractors, and unions, Mr Birch’s harshest words were for the workforce.

Strikes and poor productivity had already pushed up the project cost by more than 5100 million, he said. In total the estimated cost of the project had jumped 5250 million to 51550 million.

“There is now a fourmonth delay in the completion date which will cost the country, at 515 million a month, some 560 million in lost foreign exchange savings,” he said. He also had a warning

about the use of New Zealand labour and skill. “Though we should maximise the New Zealand content in these projects we must earn our share. We must be competitive in price, quality of work, and completion dates,” Mr Birch said. “As a nation we must not blow our advantages.” The project had been going almost 18 months and Marsden Point’s productivity should be the same as for other sites around the country, he said. “Poor productivity is a significant contributor to capital cost escalation,” he said. “I urge all parties in the expansion — management, contractors, and unions — to make every effort to get this job done as quickly as possible, on time and within the new budget, and to avoid the penalties which would result from delays and cost overruns.” He said that the project would save the country about 5180 million a year in foreign exchange, but because of its size it was vulnerable from cost overruns because of poor productivity. He said that design and

engineering work was almost complete and a little ahead of schedule. Equipment ordering was also almost complete and only slightly late.

“But is is the construction and associated procurement of materials that are behind schedule and adding to the final cost of the expansion,” he said.

Mr Birch and the caucus energy committee spent five hours at Marsden Point yesterday.

The main contractor for the job, the Badger-Chiyoda joint venture, gave a warning yesterday that unresolved industrial action by a sub-contractor was causing delays on the rest of the project. Badger-Chiyoda’s project manager for engineering, Mr Mansoor Sultan, said that other work on the refinery would have to be rescheduled, causing delays.

The six-week strike was by engineers employed by C.B. and 1., New Zealand, Ltd, a sub-contractor building new storage tanks for crude oil. The men have been on strike since early May as a result of the dismissal of one of their delegates.