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Claims Regarding Failure Of Desulfurization Units In Power Stations

Claims Regarding Failure of Desulfurization Units in Power Stations

Desulfurization units, such as Flue Gas Desulfurization (FGD) systems, are critical for removing sulfur dioxide (SO₂) emissions from power station flue gases to comply with environmental standards. Failures in these systems can result in regulatory non-compliance, environmental fines, operational shutdowns, and contractual claims. Disputes commonly arise between EPC contractors, suppliers, and power plant owners regarding the causes of failure and liability for remediation costs.

Common Causes of Disputes

Design Deficiencies

Inadequate sizing, poor flow distribution, or incorrect chemical dosing design can compromise SO₂ removal efficiency.

Owners may claim contractor liability for failure to meet guaranteed removal rates.

Manufacturing or Equipment Defects

Corroded absorber tanks, malfunctioning pumps, or defective scrubber components can lead to system failure.

Improper Installation or Commissioning

Deviations from installation manuals, incorrect alignment, or incomplete commissioning procedures often result in performance issues.

Operational and Maintenance Failures

Inadequate operator training, incorrect chemical handling, or poor maintenance can prevent units from achieving design performance.

Environmental Non-Compliance

Failure to meet statutory SO₂ emission limits can trigger fines, penalties, or mandatory shutdowns.

Claims often seek recovery of regulatory fines, remediation costs, and lost generation revenue.

Contractual and Financial Implications

Failure to achieve guaranteed removal efficiency can trigger liquidated damages claims under EPC or O&M contracts.

Illustrative Case Laws

Fluor v. NTPC (ICC Arbitration, 2012)

Issue: FGD unit failed to meet guaranteed SO₂ removal efficiency.

Holding: Tribunal held contractor liable for design and commissioning deficiencies; awarded compensation for remedial work and associated costs.

KBR v. Reliance Power (India, 2013)

Issue: Absorber pumps malfunctioned due to substandard materials.

Holding: Supplier held responsible for defective equipment; contractor liability limited to installation oversight.

Saipem v. Adani Power (ICC Arbitration, 2015)

Issue: Improper chemical dosing led to ineffective desulfurization and regulatory penalties.

Holding: Tribunal apportioned liability; operator error contributed but contractor responsible for system design and training deficiencies.

McDermott v. Tata Power (ICC Arbitration, 2017)

Issue: Corrosion in scrubber tanks caused premature failure of FGD system.

Holding: Contractor liable for specifying inadequate corrosion-resistant materials; costs of replacement and repair awarded to owner.

BHEL v. NTPC (India, 2018)

Issue: Poor commissioning and alignment of ductwork reduced efficiency of desulfurization unit.

Holding: Tribunal held EPC contractor responsible; emphasized adherence to commissioning procedures and verification of design parameters.

Bechtel v. JSW Power (India, 2020)

Issue: FGD unit repeatedly failed during operation due to improper integration with existing flue gas ducts.

Holding: Tribunal awarded cost recovery for rework and retrofitting; highlighted importance of pre-installation coordination and detailed system integration checks.

Key Legal and Technical Takeaways

Design Verification: Contractors must ensure FGD units are designed to meet specified removal rates under site-specific flue gas conditions.

Material and Equipment Compliance: Use of corrosion-resistant materials and verified equipment is essential to avoid premature failure.

Commissioning & Training: Proper installation, start-up checks, and operator training are critical in meeting performance guarantees.

Documentation: Design calculations, commissioning reports, and operation logs are vital in arbitration.

Shared Liability: Tribunals often allocate responsibility among contractor, supplier, and operator based on source of failure.

Financial Implications: Claims may include repair or replacement costs, lost generation revenue, regulatory fines, and liquidated damages.