Specialist
Former Senior Management, Supply Chain at Prysmian Powerlink Srl
Agenda
- Cause of the WesternLink damages
- Operational requirements to fix the link, including time and cost
- Impacts on WesternLink's potential customer relations
- Outlook for power cable tenders
Questions
1.
Considering the broken WesternLink cable and what it might take to fix it, do you think that the EUR 60m- 80m adjusted EBITDA hit to Prysmian is realistic, or do you think that there could potentially be worse to come?
2.
Do you think the cable’s problem is a one-off issue, or do you think it could break again in the future?
3.
Do you have any more indication of how the WesternLink cable broke?
4.
You mentioned that one possible scenario is that something went wrong during installation. What could have gone wrong in installation that caused this cable to break?
5.
How common is this installation issue as a cause of breakages across other projects than WesternLink?
6.
What do you think is the likelihood of a broken cable being caused by installation issues vs production issues? What typical proportion of breakages is attributed to each cause?
7.
Is Prysmian’s product any more delicate and vulnerable to the installation issues than any other cable installer?
8.
In the other likely scenario of the breakage being caused by production issues, what can go wrong during the production of a cable?
9.
How does advanced insulation technology affect jointing and how much more difficult is it to join a cable with it?
10.
How much more likely do you think it is for the cable to have a technical issue with 600kV technology vs 525kV?
11.
How much more likely do you think it is for the cable to have installation issues with this 600kV technology rather than 525kV?
12.
You suggested about 50/50 likelihood of issues caused by installation vs production of cable, with jointing most common for the production of the cable and laying of the cable as the biggest issue in installation. Do you still broadly stand by that 50/50?
13.
What would it take to fix this cable if this is found to be an installation issue?
14.
How much do you think it would cost to fix a possible installation issue?
15.
You mentioned the spare cable available is 1-2km. What are the chances that the laying issue has been along a larger portion of the cable?
16.
If it is an issue caused by installation, you suggested Prysmian could probably fix it as soon as there is good weather. Would it then just take 1-2 weeks and it will cost EUR 10-20m?
17.
Do you think there are any issues that could arise while fixing the cable?
18.
If the cause is the jointing issue, how would you go about fixing the problem?
19.
Q: What if the jointing issue is not a one-off and you find similarities across the cable? What is the likelihood that it could be the whole cable or 50% of the cable?
20.
In historical jointing issues, how frequently is it a one-off and how frequently do you find similarities across the whole cable?
21.
Do you think there is anything about the way Prysmian in particular produces cable or operates that could increase the likelihood of a jointing issue across a portion of the cable rather than just being a one-off?
22.
When there is a one-off jointing issue in the cable, what are the typical causes of that except the workmanship you mentioned? What are the typical causes of a jointing issue repeated across the production of the cable?
23.
Are there different procedures for making a 600kV cable vs a 525kV product?
24.
You mentioned the potential contamination as a cause for a one-off mistake and similar mistakes across the entire jointing process. What would be the different types of contamination? Why would there be contamination that would only cause a one-off issue? Why would there by systematic contamination that would be across the entire process, or at least across large chunks of it?
25.
Has there been a change in sub-suppliers or any reason to believe that there might have been a sub- supplier issue with contamination as a one-off?
26.
What are the key causes of the systematic or repetitive contamination?
27.
How old is the machinery that Prysmian uses to create this insulation in these cables? Is there a chance that that could have caused a heightened risk of debris and contamination?
28.
You said Prysmian has this tested machinery that could be 30-40 years old and it has replaced quite a bit of it. Is that replacing it completely with new equipment or just fixing the old equipment?
29.
Do you still stand by the 90% likelihood that it would be a one-off joint issue, or given our discussion, do you think there is a potentially lower chance of it being a one-off?
30.
Given the fact that the issue has happened several times on the cable now, does that lead you to point to any of the causes we have discussed?
31.
If a one-off joint issue would cost around EUR 10-20m to fix and take about 2-4 weeks depending on weather, how much do you think it would cost and how long would it take to fix a jointing issue with similarities across the cable?
32.
What would you expect to be the commercial impacts with Prsymian’s relationship with National Grid? Is it 100% Prysmian’s fault and responsibility, or is there any chance that it is a subcontractor or National Grid or even Siemens as well?
33.
How large are the contracts between Prysmian and subcontractors typically and how many contracts do you think there would be?
34.
What do you think will be the impact on Prysmian’s relationship with National Grid? Do you think it will be harder to tender more projects? Do you think it will have to downgrade in cables? Do you think it can keep the 600kV?
35.
Would there be any late fees or penalties on Prysmian from National Grid? If so, do those fee levels depend on time or also on cause?
36.
Do you think it is likely that the contract was renegotiated to increase that late fee bucket so that National Grid could claim more from Prysmian?
37.
Is the value of the WesternLink project approximately EUR 1.2bn?
38.
Is there a possibility that Prysmian could get another EUR 80m or EUR 120m on top of the value of the project as well in late fees?
39.
Do you foresee that Prysmian would be charged any more cost with this project outside of the cost to fix the cable and then potentially more late fees?
