Picture: SUPPLIED
Picture: SUPPLIED

Group Five and Cenpower Generation are heading for a legal showdown after  the Ghanaian firm slapped the construction company with a $60.5m claim to complete  a delayed power project in that country. 

Cenpower’s latest claim, which is in addition to $62.5m that the firm has already received for project delays, further pins the cash-strapped Group Five against the wall as woes associated with the Ghana project pile up.

 The latest news sent Group Five’s shares into a freefall, as they slumped as much as 67.7% to an all-time low of 11c in early trade on Thursday. It recovered to close 26.5% down at 25c.

Cenpower Generation is a special purpose vehicle created to develop the Kpone independent power plant in the Tema industrial zone, close to Ghana’s capital, Accra.

In 2014, Cenpower awarded Group Five the contract to design and construct the Kpone plant. 

The two companies have been at loggerheads over significant delays in the project, which was initially supposed to come on stream in October 2017. The two companies announced on  November 30 the termination of the contract, in which Group Five has already suffered immense losses.

For the 2018 financial year, the loss on Kpone amounts to R1.3bn. 

 In the latest turn of events, Group Five said on Thursday Cenpower has made a claim for $60.5m to cover costs to complete the project. Group Five disputes the claim.

“[Group Five] is in discussions with its legal advisers and senior counsel, as well as its bank guarantee providers, with regards to the claim and is considering the available legal action,” it said.

 

Graphic: DOROTHY KGOSI
Graphic: DOROTHY KGOSI

In its statement on the termination of the contract on November 30, Cenpower CEO Theophilus Sackey hinted at further claims by saying the $62.7m his company had received for the project’s delays “does not come close to the losses suffered by the company”.

Group Five said that in terms of the contract with Cenpower, any amount it is liable for has to either be agreed between the two companies or determined through the dispute resolution mechanism in the contract.

“This demand has not been independently determined and does not reflect the counterclaims [Group Five] is legally entitled to and is pursuing,” the company said, referring to its own claims against Cenpower. These include claiming back the $62.7m it has paid for project delays.

“[Group Five] strongly disputes the amount claimed and the demand for its payment, as the client themselves confirmed that the construction on the plant was complete, with only testing and commissioning to be performed,” it said.

In its statement, Cenpower said construction of the plant is complete “but testing and commissioning work still remain to be performed”. It said a technical team has been assembled to complete the outstanding commissioning works as soon as possible. 

Group Five has maintained that it is responsible for the delays in testing and commissioning of the plant. It has blamed faulty fuel provided by Cenpower. “As communicated, the provision of the fuel was the client’s responsibility and [Group Five] was unable to complete the testing and commissioning of the plant as the fuel provided by the client was contaminated and unfit for its purpose,” it said.

It said three independent parties and laboratories confirmed that the fuel had been contaminated at Cenpower’s source of supply. “The contamination of the fuel remained unresolved at the date of termination,” Group Five said.

njobenis@businesslive.co.za