Ghana’s Cenpower Generation terminates contract with South Africa’s Group Five

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Cenpower Generation, a Ghanaian power company, terminated its troubled contract with South African construction company, Group Five, to complete the $410 million Kpone power station in Tema, Ghana.

The decision to terminate was made following Cenpower making a $62.7 million claim against Group Five’s retention and performance bonds for delays in completion of the 340MW fuel-fired thermal power plant. Group Five replied the allegation by claiming the delays were partly as a result of Cenpower supplying the power plant with “contaminated” fuel.

Group Five also said besides the quality of the fuel, the project was delayed by problems experienced at the plant’s water treatment facility and issues around steam quality. The company noted that the inability of the power grid to receive power during the commissioning phase was also a problem.

The construction company said it had to deal with a change in design. It was noted that the plant is fuelled by diesel and crude oil but there were plans to also use natural gas. Group Five claims Cenpower said the plant should be handed over only using diesel and crude oil as no natural gas was available.

The cancellation of the project came about a month after it was scheduled for completion, with Group Five revealing that it incurred a 1.3 billion rand loss on the project for the year to end-June 2018.

Group Five said the termination of the contract opened the way for dispute resolution procedures. The company said it will take advantage of the process to recover all amounts “due and owing” on the contract.

The dispute will be taken to the International Chamber of Commerce (ICC) in Paris. Group Five said compared to taking the matter through arbitration, ICC’s dispute resolution processes are considerably quicker.

The construction company expects the first disputes with Cenpower to be completed by early 2019.

 

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