Ghanaian power firm ends troubled contract with Group Five
Ghanaian power company Cenpower Generation has terminated its contract with local construction Group Five to complete the $410m Kpone power station in Tema, Ghana.
The termination on Friday is the latest twist in a relationship that turned acrimonious following Cenpower making a $62.7m claim against Group Five’s retention and performance bonds for delays in completion of the 340MW fuel-fired thermal power plant.
Group Five said the delays were partly as a result of Cenpower supplying the power plant with “contaminated” fuel.
Besides the quality of the fuel, the project was also delayed by problems experienced at the plant’s water treatment facility and issues around steam quality.
The inability of the power grid to receive power during the commissioning phase was also a problem.
Group Five also had to contend with a change in design. The plant is fuelled by diesel and crude oil but there were plans to also use natural gas. Cenpower said the plant should be handed over only using diesel and crude oil as no natural gas was available.
Group Five incurred a R1.3bn loss on the project for the year to end-June 2018.
The cancellation of the project came about a month after it was scheduled for completion.
Group Five said the termination of the contract opened the way for dispute resolution procedures, which meant a reasonable prospect for recovering all amounts “due and owing” on the contract.
The dispute with Cenpower will be taken to the International Chamber of Commerce (ICC) in Paris. Group Five said the ICC’s dispute resolution processes are considerably quicker than taking the matter through arbitration.
Group Five expects the first disputes to be completed in early 2019.