Group Five pays $43m of Cenpower’s claim, contractual dispute continues

12 December 2018

JSE-listed construction company Group Five announced on Tuesday that $43.8-million had been paid by its guarantee providers to Cenpower.

Payment was made on the basis of the legal requirements on on-demand bonds and not on the merits of the contractual claims presented by the client, Group Five stated in an update to shareholders.

Last week, Group Five had been informed of a new claim of $60.5-million from Cenpower, which in November terminated its contract with Group Five for the construction of the Kpone gas and oil-fired combined cycle power plant project, in Ghana.

The new claim represented the client’s evaluation of the costs to be incurred to complete the works on the contract, as well as amounts relating to the recoupment of estimated losses and damages the client believed it incurred as a result of delays on the project.

The new claim followed a previous claim to Group Five’s bank guarantee providers in November for $62.7-million to be paid for contract delay damages at Kpone. Group Five has been in discussions with its legal advisers and senior counsel, as well as its bank guarantee providers, regarding the claim and is considering available legal options.

The company “strongly” disputed the amount claimed, stating that the client had confirmed that the construction of the plant was complete, with only testing and commissioning left to be performed.

Group Five said it could not complete the testing, alleging that the fuel provided by the client was contaminated. Group Five said its legal advisers believe the company has merit and a reasonable prospect of recovering payment from the client.

Group Five has submitted the dispute to the International Chamber of Commerce, in Paris, for resolution, since it is a quicker process than arbitration. The first disputes were expected to be completed in early 2019.

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