United launches pounds 90m compensation claim after pulling out of Bang kok sewerage deal

UNITED Utilities yesterday ended its disastrous foray into the sewers of Bangkok by pulling out of a contract to modernise the city's sewerage system and launching a compensation claim to recover the pounds 90m it has lost on the deal.

North West Water International (NWWI), UU's overseas arm, was awarded the pounds 150m project in 1993 but quickly ran into trouble after the Bangkok Metropolitan Authority began to change the specifications and introduce new by-laws which slowed down work on the contract.

The company made a pounds 7m provision against the contract in 1995 and then took a further pounds 83m charge in 1997. Late last year, work was halted on the scheme after the Bangkok authorities suspended further payments to NWWI.

UU said it was confident that it would not have to make any further provisions against the contract and disclosed that it intended to go to arbitration to recover its losses. It added that it had taken advice from senior construction lawyers in the UK and Thailand and was confident that it had a strong case.

The project involved building a waste treatment works and a 31-mile network of sewers under the Thai capital. But the Bangkok authorities increased the specifications, asking for a 24 per cent increase in the length of tunnelling and a tripling in the number of manholes. New city regulations were also passed which restricted construction work to a four- hour period each night and prevented any work which caused "noise, vibration or excessive light".