Montreal will pay nearly $32 million more to Veolia to enable it to complete the construction of the composting and biomethanation plants and relaunch the sites that have been paralyzed since last July.
Meeting Friday morning, the members of the executive committee approved this additional expense, which totals $31.8 million, in order to increase the contingency budgets of the two projects. An additional $25.6 million was approved by elected officials for the Montreal East biogas plant project and the value of the contract to Veolia now stands at nearly $166.6 million. In the case of the Saint-Laurent composting plant, Montreal adds an amount of $6.2 million to bring the cost of the contract to $151.8 million.
The City thus hopes to turn the page on a dispute that has pitted it against Veolia for months and put the two projects back on track.
It should be recalled that activities on the two sites had ceased on July 15, 2022 following a commercial dispute between Veolia (formerly Suez) and its subcontractor EBC Construction. This was not the first interruption since another work stoppage occurred in the winter of 2021 for the same reason.
Unblocking of negotiations
In the office of Mayor Plante, it is indicated that Veolia maintained that it was facing higher costs than expected. According to the City, the company then invoked inflation and the war in Ukraine. But these arguments did not convince the City. After a meeting convened by the mayor with Veolia executives, the company detailed the issues it was facing, particularly with regard to site conditions and the technology used, which generated higher costs, which made it possible to move the negotiations forward.
The City has assessed the possibility of terminating the contracts and using another supplier, but since the number of players is limited in this area, such a scenario would not have been advantageous for the City and Montreal taxpayers, estimates the Plant administration. “We are confident that this decision is the best solution in the current market circumstances,” said the office of the mayor in a statement sent to the Duty. “It was the responsible thing to do to finalize the construction of these two essential centers for the management of organic materials. »
The City is therefore hopeful that work will resume quickly. The Saint-Laurent composting plant should begin to receive and process organic matter starting next fall, while the Montreal East composting plant should be operational by the end of 2024, according to the City’s latest estimates.
The site of the Saint-Laurent plant is 90% complete and that of the biomethanation center in Montreal-East is nearly 60% complete, it is noted.
“We are pleased that the City has approved an increase in contingency budgets,” commented Carrie Griffiths, director of communications at Veolia, by email. “Discussions are continuing between the City, the construction contractor EBC and Veolia to find a solution acceptable to all. »
In 2013, the City kicked off the project to build four organic matter treatment plants on its territory at a cost of $237 million. These were to be in operation from 2016. Since then, the project has evolved. In 2018, costs exploded to 523 million due in particular to the higher than expected costs of the tenders received.
In 2021, in her annual report, the Auditor General Auditor General of the City of Montreal, Michèle Galipeau, criticized the City for having lacked rigor in the management of this ambitious project.