Red-faced Transfield promises overdue payments within two working days

Transfield Services, the Australian company at the centre of a row over payment of New Zealand sub-contractors on the national ultra-fast broadband project, has broken its two day silence on the issue to say all outstanding payments will be made in the next two working days.

In a statement on the company’s website, Transfield apologises “for the disruption caused by payment problems, and we’re concerned and disappointed that it has escalated to this level.”

The issue was highlighted by New Zealand First party leader Winston Peters, leading at first to dismissive comments from Communications Minister Amy Adams, who suggested subcontractors should look to contractual remedies for non-payment.

By this morning, she was saying she was not happy with the situation, which has seen Transfield subcontractors working for Chorus, which is responsible for rolling out around 70 percent of the national UFB project, down tools after going unpaid for extended periods of time.

Subsequently, Transfield also advised three contracting firms it was standing them down for the next three months, citing lack of work while ducting design issues were resolved – an explanation disputed by Christchurch network company Enable.

Chorus sent Transfield a “please explain” note yesterday and said in a statement today that it was up to date in all its payments to Transfield, which is responsible for around 10 percent of the work Chorus is undertaking. Chorus has contracted Leighton Holdings Visionstream and Downer EDI to complete the remainder of its part of the project, which is being funded with assistance from a $1.35 billion revolving fund from the government.

Transfield is also contracted to other UFB roll-out partners who have contracts for the remaining 30 percent of the rollout, including Enable in Christchurch and WEL Networks in the Waikato.

Chorus said it has fully-paid Transfield and expects to pay August invoices on Sept. 20.

“We are dismayed that this situation has arisen, and in particular we find the treatment of the sub-contractor community to be unacceptable,” Chorus chief executive Mark Ratcliffe said in a statement. “We note Transfield’s assurances that it is endeavouring to make good on any outstanding payments and look forward to resolution.”

Chorus estimates the entire network will cost between $1.7 billion and $1.9 billion, and is running ahead of schedule after facing some early setbacks which increased the forecast cost of the project.

Transfield said it was implementing measures to make outstanding payment to its New Zealand subcontractors had already paid one-third of the outstanding amounts owing.

“Over the last 24 hours we have undertaken a detailed examination and found a solution which should allow all subcontractors affected to be paid in full in two business days,” said Nicholas Yates, chief executive of Transfield Services Infrastructure.

“We will be in direct contact with subcontractors concerned today to advise when they will receive payments and will be addressing the issue with priority to those most impacted.”

He offered no explanation for its tardiness, but said Transfield would “now be dealing directly with its subcontractors, clients and the New Zealand government to ensure they are informed on progress in resolving this problem.

Chorus shares were unchanged at $2.96.

(BusinessDesk)

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