Siemens seeks arbitration in dispute with Lopez firm

German industrial conglomerate Siemens has sought arbitration proceedings with the International Chamber of Commerce (ICC) in its dispute with First Philippine Holdings Corp. (FPHC), the energy arm of the Lopez-controlled Benpres Holdings Corp.

In a letter to the Philippine Stock Exchange, FPHC chief information officer Ernesto Rufino said they have been informed by the Siemens group (Siemens AG, Siemens Power Generation and Siemens Inc.) that it has submitted a request for Arbitration to the ICC, contesting claims for liquidated damages of about $99.3 million by FPHC subsidiary First Gas Power Corp. (FGPC).

FGPC has blamed Siemens for the delay in the construction of a 1,000 megawatt combined cycle power station in Santa Rita, Batangas which was signed by the two parties under a Turnkey Engineering, Procurement and Construction (EPC) contract on Dec. 1996.

Rufino said Siemens and its subcontractors incurred delays in project completion, resulting in liquidated damages of approximately $99.3 million owing from Siemens to FGPC under the EPC contract.

"Pursuant to the EPC contract, FGPC withheld approximately $94.2 million from its milestone payments to Siemens," he added.

But in its arbitration request, Siemens claimed FGPC is not entitled to any liquidated damages and that FGPC has no remedy for Siemens’ delay in the completion of the power plant.

Siemens, in turn, is also seeking additional amounts for claimed time-related costs, non-time related costs, overhead and profit, and finance charges.

"FGPC plans to contest vigorously all of Siemens’ claims, including those claims that seek recovery of amounts withheld under the EPC contract as liquidated damages. FGPC plans to seek the additional approximately $5.1 milllion owed by Siemens in liquidated damages as well as additional amounts in counterclaims against Siemens," Rufino added.

Earlier, Siemens agreed to resolve another dispute with FGPC, this time relating to the construction of a 500 MW combined cycle power station in San Lorenzo, Batangas.

The German giant has failed to meet the guaranteed completion date of May 2002 under the EPC contract, and this time, Siemens has paid delay liquidated damages and has incurred gas delay liquidated damages.