Business groups weigh legal action as power cut contractor comes under scrutiny 

Gibraltar’s business organisations are both considering the possibility of legal action on behalf of their members after a contractor cut through three main power cables on Tuesday, plunging Gibraltar into darkness for seven hours. 

The development came as the Office of Fair Trading confirmed that the contractor, SDE Ltd, did not have a business licence at the time of the incident. 

The GSD was critical too of the Government, describing as “reckless” that the contractor had been authorised to operate without the necessary permissions and close oversight. 

Both the Chamber of Commerce and the Gibraltar Federation of Small Businesses highlighted the impact on businesses, particular on smaller ones who cannot afford an independent back-up power supply. 

On Tuesday afternoon, with Main Street heaving with visitors including passengers off two cruise ships, many shops were forced to shut and others, which did not, saw trade fizzle out inside darkened stores. 

Bars and restaurants were also hit by the power cut, which started during lunchtime. 

The Chamber of Commerce said the wage cost of the power cut was “very conservatively” estimated at over £2.5m, with the lost sales to shops, restaurants and other service businesses “likely to be many times this figure” 

The Chamber also noted the cost and time implications to businesses whose computers and other equipment were “fried by power surges”, none of which is compensated. 

“The Chamber is considering seeking legal advice to pursue a collective action against the contractor on behalf of its members to recover the losses suffered from the power outage,” the Chamber said in a statement. 

The GFSB, whose chairperson Owen Smith on Tuesday highlighted similar concerns about the impact on businesses, is following suit. 

“We are actively considering a range of options, from meetings and representations to potential legal action,” Mr Smith told the Chronicle. 

The Chamber said there had been “far too many power cuts” since the new power station entered operation, many caused by avoidable “carelessness and ineptitude”. 

Alongside tougher legislation and sanctions for contractors – which the Government said it is working on but which the Chamber argued was “already taking far too long” - the Chamber said contractors undertaking civil engineering works should be required to post a bond of “say £10m” before any works can commence.  

“In case of works causing an unexpected power cut or other disruption to public services the bond would be used to compensate businesses which had been affected by the disruption,” the Chamber said. 

“This would serve to underscore the true cost of these power outages to contractors and as a result they will hopefully become far less frequent.” 

PELAGOS DROPS SDE 

SDE Ltd has been trading for some years but its business licence had lapsed and was renewed on Wednesday, meaning the work on Tuesday was not covered by a valid licence, the OFT confirmed. 

The company had been contracted by Pelagos Data Centre Ltd to conduct exploratory bores at the site where it hopes to build a £1.8bn data centre, a project that has yet to obtain planning permission from the Development and Planning Commission. 

It was during the drilling of one of those bores that the three cables were damaged by a Spanish company contracted by SDE Ltd to carry out that work. 

SDE Ltd had been given plans showing where the cables were buried at the site but, in an interview with GBC on Tuesday evening, acting GEA chief executive Stanley Antoniou said the contractor did not appear to have them at the site when the incident occurred. 

Pelagos Data Centre Ltd said it was undertaking “an in-depth private internal investigation” into the power outage and that it would assist the Gibraltar Electricity Authority with its enquiries. 

“Pelagos will deliver this report to the Gibraltar Electricity Authority and the Government of Gibraltar once concluded,” the company said in a statement issued through its lawyers, Hassans. 

“Pelagos, in consultation with the Government of Gibraltar, have agreed that both the contractor and the sub-contractor that were engaged to undertake the works that were done and were concluded yesterday, should have no further involvement in the data centre project going forward.” 

‘SHOCKED’ 

On Wednesday, the GSD said it was “deeply alarmed” to learn that SDE had been operating without a business licence or planning permission at the time of the blackout. 

“This shocking revelation compounds the seriousness of what was already a catastrophic failure of Government oversight,” the Opposition said.  

“It is unacceptable that the Minister Arias Vasquez, with responsibility for the Office of Fair Trading and Public Utilities, sought to shield herself from criticism by emphasising that the contractor ‘had the plans’.” 

The GSD said the legal requirement for a contractor to hold a valid licence and the necessary planning approvals “was overlooked”.  

It said authorising exploratory works without such “fundamental compliance” was both “reckless” and a direct breach of the minister’s duty to uphold the processes her ministry was responsible for enforcing.  

The GSD criticised too that this “critical detail” was not explained by the Government on the day of the incident, leaving citizens with “vague statements and deflections” when transparency and accountability were most needed. 

“The people of Gibraltar had to endure hours without power, businesses suffered financial losses, and vulnerable members of our community were put at risk, all without being told that the works were carried out unlawfully,” the GSD said. 

“This is not simply a matter of poor communication. It is a matter of governance and integrity.” 

It questioned how a contractor without a licence and planning permission could be allowed to dig into critical infrastructure. 

It asked too who authorised the works and why procedures were bypassed. 

It called on Mrs Arias-Vasquez to explain why SDE was permitted to operate without a business licence; why planning permission requirements were “ignored”; why the public was not told “the full truth” on the day of the blackout, and who issued the SDE business licence overnight following the incident.  

“The scale of this failure goes beyond the serious ramifications of the blackout itself,” said GSD MP Craig Sacarello.  

“It is about the rule of law, public trust, and ministerial responsibility.” 

“The Opposition will continue to press for full accountability. Gibraltar deserves better.” 

AIRFIELD 

Among those impacted by the Gibraltar-wide power cut were passengers on a commercial flight due to arrive in Gibraltar 25 minutes after the outage. The flight was diverted to Malaga. 

The MoD confirmed that the airfield has back-up systems to provide redundancy. 

But the inbound flight was due to land during the early stages of a live incident that left Gibraltar’s emergency services responding to multiple callouts from people requiring assistance, and the 999 emergency phone line down due to the outage. 

With the situation unclear and passenger safety the top concern for all airfield operations, flights were diverted as a precaution. 

The airfield resumed normal operations on Wednesday morning.