In a trading update to shareholders this morning, the contractor said that a further deterioration in the project has “significantly adversely impacted” its expectations for the UK construction division as a whole.

The issues relate to the design, procurement and installation of the gasification plant, together with continuing challenges with the supply chain that will result in further cost overruns and delays.

The statement added: “As a result the board anticipates a £70m exceptional contract provision to be taken in the first half of 2016, resulting in a similar level of cash outflow spread across 2016 and 2017. We will be pursuing every opportunity to mitigate this situation.”

The £154m project for client Viridor is months behind schedule and was also subject to strike action last month.

Completion was originally scheduled for 2016.

Overall Interserve said its balance sheet remains robust, however, taking full account of the cash impact of the contract provision, net debt is expected to be around £35m higher than previously guided at both the half year and the year end.