JSE-listed construction and engineering firm Group Five has been awarded a R4bn engineering, procurement and construction contract by Ghanaian energy group Cenpower Generation.
It will design and build a 350MW gas- and oil-fired combined-cycle power plant in the Tema industrial zone in Ghana.
The deal is still subject to certain conditions and will proceed to commercial and financial closure over the coming weeks. Once this has happened, the group will receive a notice to proceed.
Contract execution is expected to take about three years.
Group Five, which has operated in Ghana for 15 years, said the new power contract would significantly increase its order book. The new project was similar to the more than 10 engineering, procurement and construction power contracts, worth R6bn, that it had completed over the past seven years.
“It’s a culmination of a clear strategy to get into the power generation market some seven or eight years ago,” CEO Mike Upton said yesterday. The contract was won against competition from many international bidders and was a result of four years of talks with Cenpower Generation.
General Electric and Siemens, among other global groups, will supply the power generation equipment worth about half the contract value.
Tema, Ghana’s major residential and industrial city, has the largest sea port in the country. It is about 24km from the international airport in the capital, Accra.
Rand Merchant Bank, a division of FirstRand, is the co-ordinating lead arranger for the full commercial debt package. It will be supported by the Export Credit Insurance Corporation of SA.
Group Five said it would update stakeholders once both commercial and financial closure had been reached.
Mr Upton said during the company’s results presentation earlier this month that the timing of large public-sector contracts in SA was “uncertain” amid protracted labour unrest. But the group’s other African and Eastern European markets were “more dynamic”.
Revenue shot up 39% in the period, operating profit rose 22% and fully diluted headline earnings per share from continuing operations climbed 26%.
Mr Upton is nearing the group’s executive retirement age of 60 and an announcement on his successor is expected soon.
