Claim from Ghana hits Group Five

Business Day - - Front Page - Siseko Njobeni In­dus­trial Writer njobe­[email protected]­nesslive.co.za

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.

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. Cen­power’s lat­est claim, on top of $62.5m the firm has al­ready re­ceived for project de­lays, fur­ther pins the cash­strapped 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, ini­tially due to come on stream in Oc­to­ber 2017. On Novem­ber 30, the com­pa­nies an­nounced 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.

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

Group Five said in terms of the con­tract any amount it is li­able to has to ei­ther be agreed be­tween the two com­pa­nies or de­ter­mined through the con­tract’s dis­pute mech­a­nism.

“This de­mand has not been in­de­pen­dently de­ter­mined and does not re­flect the counterclaims [Group Five] is legally en­ti­tled to and is pur­su­ing,” it said, re­fer­ring to its own claims against Cen­power. These in­clude claim­ing back the $62.7m it has paid for 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 work as soon as pos­si­ble. Group Five has main­tained Cen­power is re­spon­si­ble for the test­ing and com­mis­sion­ing de­lays, blam­ing faulty fuel it had pro­vided.

“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 pur­pose.”

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.

CEN­POWER WANTS GROUP FIVE TO COVER COSTS TO COM­PLETE THE KPONE POWER PROJECT IN GHANA

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