The Cardiff Capital Region is facing the prospect of having to pay millions of pounds in damages following a successful legal challenge over how a lucrative £30m contract to demolish Aberthaw Power Station was awarded.
The former coal-powered station, and its 500 acres of land overlooking the Bristol Channel in the Vale of Glamorgan, was acquired from energy giant RWE in 2022 for £8m by the city region - which is made of the 10 local authorities of south-east Wales , which includes Council.
The acquisition was financed from the region’s £1.2bn City Deal, with funding also set aside for the demolition of the power station and remediation work.
Following the acquisition the city region created a separate legal entity to oversee the Aberthaw project - CCR Energy Ltd - with long term plans to transform the site into a major hub for renewable energy project. Following a public procurement exercise the contract to demolish the power station was awarded to industrial demolition specialist firm Erith. The contract opportunity was brought to market on behalf of the city region by , but they were not involved in the decision making process to award it.
Erith began work last February with a projected completion date of March, 2027. However, a legal challenge into how the contract was awarded was subsequently lodged by losing bidder, Brown and Mason Group (BMG).
On its website legal firm 11KBW said its KC Joseph Barratt and Ben Mitchell have been successful in that legal challenge on behalf BMG.
11KBW added: “In the pre-trial review on 31 January 2025 Cardiff Council abandoned its defence of the proceedings and conceded liability, causation and sufficiently serious breach.”
The firm said proceedings have now moved to the quantum stage, with its client’s claim valued in excess of £10m - although that doesn’t mean that will be the amount paid.
The city region has been asked to clarify, regardless of the final amount, whether it would ultimately be liable and if there is any insurance cover in place.
It has also been asked to clarify if there could be any implications for its City Deal, including what remains to be invested. The £1.2bn City Deal was funded by both the Ƶ and Welsh governments. While the lion’s share (£734m) went to the South Wales Metro rail electrification project, that still left nearly £500m to invest in projects across the region, which have included £50m into an equity investment fund and £50m into its Northern Valleys programme.
As of last year some £50m had yet to be deployed. The city region last year became a statutory body.
On its website 11KBW claims the breach of duty in the proceedings (now conceded) were “extremely wide ranging”, including:
- Unlawful changes being made to the award criteria during the course of the procurement;
- A very significant number of breaches of duty in the evaluation of bids, including manifest errors and failures to apply the published award criteria;
- Failure to create or retain lawful or transparent records of the evaluation;
- Apparent bias in the conduct of the evaluation
- Failing to disqualify the preferred bidder on grounds of its failure to meet a number of deadlines and other mandatory requirements; and
- Unlawful negotiation with the preferred bidder after the expiry of the tender deadline.
A spokesman for the Cardiff Capital Region said: “Liability has been admitted in respect of a procurement challenge by an unsuccessful bidder in relation to the demolition of the former coal-fired Aberthaw Power Station. As this is currently the subject of ongoing legal proceedings (including any outcome on damages), until that process is concluded, we are unable to comment further.”
In March, 2023 the Competition and Markets Authority (CMA) fined Erith, along with nine other firms, who included BMG, collectively nearly £60m for colluding on prices through illegal cartel agreements when submitting bids in competitive tenders for contracts.
