Group Five on Friday denied that Cenpower was entitled to terminate the contract. Photo: Simphiwe Mbokazi/African News Agency (ANA)

PRETORIA – Cenpower Generation Company claims the $62.7 million (R857.7m) in delay damages it received from listed Group Five’s bank guarantee providers for its $410m Kpone power plant contract in Ghana "do not come close” to the losses it has suffered.

Cenpower last week terminated its engineering, procurement and construction (EPC) contract with Group Five for the Kpone power plant.

Theophilus Sackey, the chief executive of Cenpower, said the company and its shareholders remained committed to ensuring the project was completed and commercially operational as soon as possible.

Sackey said construction of the plant was complete, but testing and commissioning had to be performed.

Sackey said the project had suffered more than a year’s delay, and Cenpower recently called on the bonds put in place as security by Group Five for delay damages due to the inability of Group Five to complete the project by the scheduled completion date of September 13 last year.

He said Group Five had been allowed time to remedy its failure to complete the project on time, but, as a consequence of the continued delays, it was necessary to terminate the contract.

“Given the continued delays to completion, it has been concluded that it is in the best interests of the project and its stakeholders to terminate the EPC contract,” he said.

Group Five on Friday denied that Cenpower was entitled to terminate the contract, adding it believed “the purported notice of termination is wrongful and constitutes a repudiation of the contract”.

The group said it had, therefore, notified Cenpower that it had accepted its repudiation of the contract and had accordingly issued a notice of termination to Cenpower that effectively terminated the contract with immediate effect.

Group Five said one of the reasons it considered Cenpower’s notice of termination to be a repudiation of the contract related to the fuel Cenpower provided for the testing and commissioning of the plant being “contaminated and unfit for its purpose”, and Cenpower’s failure to resolve the contamination.

It said it would continue to progress its contractual rights and entitlements for payment of all amounts due and owing under the contract, including the recovery of delay damages paid in terms of the guarantees amounting to $62.7m and claims against the client. 

The group said this included a submission to the International Chamber of Commerce in Paris for the resolution of a dispute through expert proceedings. Group Five shares fell 10.26 percent yesterday to close at 35 cents.

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