Kpone costs Group Five $106.5m
PRETORIA – The total amount Group Five's bank guarantee providers have paid to the Cenpower Generation Company for the $410 million (R5.88 billion) Kpone power plant in Ghana has swelled to $106.5 million.
This follows the listed construction and engineering group reporting last week that Cenpower had instituted a new claim of $60.5m and a written demand to the group's bank guarantee providers requesting that an amount of $43.8m of the $60.5m claim be paid to Cenpower.
Group Five said yesterday that the demand of $43.8m was paid to Cenpower by the group's guarantee providers on the basis of the legal requirements of on-demand bonds and not on the merits of the contractual claims presented by the client.
This payment is in addition to the $62.7m in delay damages paid to Cenpower by Group Five's bank guarantee providers after the dismissal of the group's urgent interdict application to the high court in Johannesburg to stop Cenpower demanding the delay damages from its bank guarantee providers.
Group Five said yesterday that the claim of $60.5m represented Cenpower’s evaluation of the costs to be incurred to complete the works on the contract and amounts related to the recoupment of estimated losses and damages the client believed it incurred.
“The group strongly disputes the amount claimed and the demand, as the client themselves confirmed the construction on the plant was complete, with only testing and commissioning to be performed,” it said.
The group reiterated that in terms of the contract, any amount it would be held liable for and/or entitled to needed to either be agreed between the parties or determined through the dispute resolution mechanism.
It stressed this demand had not been independently determined and “does not reflect the counter claims the group is legally entitled to and is pursuing”.
Cenpower last month terminated Group Five’s Kpone contract.
Theophilus Sackey, the chief executive of Cenpower, said then that the project had suffered more than a year's delay, and Cenpower had 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.
Sackey said Group Five had been allowed time to remedy its failure to complete the project on time, but, as a consequence of the delays, it was necessary to terminate the contract.
Group Five denied Cenpower was entitled to terminate the contract, stressing it believed the termination was wrongful and constituted a repudiation of the contract.
Group Five shares closed 4.17 percent higher at R0.25 on the JSE on Tuesday.