Fulcrum fires back in Abengoa controversy

In California, Fulcrum executives assailed a report appearing this week in Spanish media alleging $100 million cost overruns and other difficulties in the Sierra Biofuels project near Reno, Nevada.  It’s loaded with inaccuracies, Fulcrum vice president Rick Barraza told The Digest.

“The cost overruns are not $100 million,” said Fulcrum VP and CFO Eric Pryor, “the figure does not approach $100 million, or anywhere near that, it’s significantly lower.” Pryor also noted that the project is “85 percent complete,” and the principal major unit not yet installed is a Heat recovery steam generator , a unit used to produce steam and power for a facility. The unit is expected to arrive at the Sierra Biofuels project later this month.

The report in El Confidential alleged that an arbitration ruling from the International Chamber of Commerce found that each company should be responsible for $50 million of the costs while Abengoa should also be responsible for $17 million in financial guarantees that Fulcrum took out for the project. 

Pryor flatly denied the story, adding that arbitration is underway but no rulings have been issued, and that each side has unresolved claims. “There’s no settlement, no agreement to split the costs 50/50, it’s ongoing arbitration.” Asked about where such a specific report could have come from, Pryor said “Honestly I have no idea, we are baffled by it.”

Pryor told The Digest that “Abengoa has not abandoned the project, nor have we called a default. We are working with them to find a path forward. They have had financial difficulties that have worsened with COVID-19, and we are working with them now to try to figure out a path forward.”

Asked about payment stoppages to suppliers, Pryor downplayed the reports so far as Fulcrum is aware. He said, “we don’t have complete visibility on the relations between Abengoa and its suppliers, it’s really something for them to address. Over the course of the project, we’d get calls, then Abengoa would pay the supplier. It’s an ongoing thing.” 

Asked about contingency plans to have another contractor step in to complete the Fulcrum project, Pryor said that Fulcrum has another contractor ready if necessary, but would not rule out working with Abengoa going forward.

During the COVID-19 crisis, the state of Nevada deemed the Fulcrum facility an “essential project”, and the project has not been affected in a significant way by the crisis, impacts have been limited to some issues with craft labor availability.

A number of corporate investors in Fulcrum or the project, are leaders in sectors such as aviation that have been hit hard by the economic impacts of the pandemic. Pryor paid tribute to their fortitude. “All our investors, including large industrials and airlines, are all extremely supportive, and we couldn’t ask for better ones. Even in these terrible times.”