Aggreko pulls Olympic tender, leaves Rio 2016 power in doubt

Mon Dec 14, 2015 12:03pm EST
 
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By Stephen Eisenhammer

RIO DE JANEIRO (Reuters) - Temporary power supplier Aggreko (AGGK.L: Quote) has pulled out of a tender to provide generators to the Olympics in Rio de Janeiro next year, the spokesman for Rio 2016 told Reuters, dealing a major blow to organizers rushing to secure an energy source for the world's largest sporting event.

The temporary power contract is a vital part of Olympic preparations, guaranteeing a stable and secure energy supply for international broadcasters, the opening and closing ceremonies, as well as back-up electricity for the venues.

The most experienced bidder pulling out on such a crucial contract is a worrying sign for Olympic organizers who are under huge pressure to cut spending as Brazil languishes in its worst recession in 25 years. The government has already warned that there is no money to cover any cost overruns.

Preparations for South America's first Olympics have been dogged by concerns over the polluted bay where the sailing will be held as well as violence spilling over from heavily policed slums, or favelas. Officials say construction of venues and infrastructure remains on track, but recently admitted Brazil's recession is making delivery more difficult.

Aggreko, which has been involved in nine Olympics and six World Cups, declined to comment because the result of the tender has not yet been announced. Sector analysts said not being awarded the contract could impact Aggreko's 2016 earnings and shares in the company closed down 1.8 percent.

For London 2012, Aggreko's power deal was worth nearly $60 million, although the Rio 2016 contract is expected to be less as it is smaller in scope.

Rio 2016 spokesman Mario Andrada told Reuters he was comfortable with the companies still competing for the tender, the winner of which will be passed to the board for approval on Tuesday.

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A worker walks in front of the Olympic aquatic venue for the Rio 2016 Olympic Games during the third media briefing for the Games in Rio de Janeiro, Brazil, October 6, 2015. REUTERS/Sergio Moraes