$5.9b Mambilla power project in legal crisis




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Dam for Hydroelectricity project
Mambilla power project (Illustration)

The $5.8 billion Mambilla hydro-power project in Taraba State is enmeshed in a legal crisis.

The crisis reared its head barely a year after the signing of an agreement for the construction of the project.

The legal hitch follows moves by some forces in government to sideline the local content partner, Sunrise Power and Transmission Company Limited.

The company was awarded the Build Operate and Transfer (BOT) contract for the project in 2003.

But the issues surrounding the project are now before the ICC Arbitration Panel in Paris.

Although an amicable resolution of the legal dispute has been proposed, it was learnt the project might be stalled unless President Muhammadu Buhari intervenes in the crisis.

The Federal executive Council (FEC) on August 30, 2017 approved the award of the project to Messrs China Gezhouba Corporation, Sinohydro Corporation Limited and CGOC Group Limited.

In November 2017, the Minister of Works, Housing and Power, Mr. Babatunde Fashola signed the contract for the 3,050megawatts hydro power project.

During a state visit to China on September 7, 2018, the President of CGCC, the construction company, Prof. Lyu Ze Xiang, told the President that “our target is to commence the project early next year.”

But while the President is looking forward to the take-off of the project, the legal dispute before the international arbitration panel is yet to be resolved.

Sensing a likely legal crisis, the Attorney-General of the Federation and Minister of Justice, Mr. Abubakar Malami, n a July 24, 2017 letter to the then Acting President, Prof. Yemi Osinbajo, recommended that the interest of the local partner, Sunrise Power and Transmission Company Limited, should be accommodated.

In a memo, the AGF said: “Sunrise Power and Transmission Company Limited should be engaged as Local Content Partner on the Mambilla Project as a means of accommodating its prior contractual interests on the project.”

But instead of complying with the advice of the AGF, some government officials had been trying to shut out the local content partner.

The power-play in government over local content partner has created a major hurdle for the Chinese consortium.

A source said: “In spite of the fact that this is a signature project for this administration, some government officials do not want the construction of the Mambilla Hydro-Power Project to take off early 2019 as contained in the timeline.

“And with the fresh legal dispute over the project before an international arbitration panel, the government may find it difficult to finance the plant. By its funding module, the project would be jointly financed by the Federal Government and the China Export Import (EXIM) Bank. While EXIM bank will provide 85 per cent of the cost, the Federal Government is to bear 15 per cent.

“Unknown to the President, there are vested interests in government trying to drag the nation into unnecessary legal web which might delay the construction of the new plant.

“Some of these power brokers wanted some of the billions of dollars meant for Mambilla Project to be diverted to a 1500MW solar power project.”

As at press time, it was gathered that the Federal Government was yet to reach an amicable resolution with Sunrise Power and Transmission Company Limited and Sinohydro Corporation states at the arbitration panel in Paris.

In a November 18, 2018 petition to President Buhari, the Chairman/CEO of Sunrise Power and Transmission Company, Mr. Leno Adesanya, exposed the intrigues behind the project and the need for a presidential intervention.

The petition to President Buhari was entitled “Re: Proposed Amicable Resolution in respect of ongoing $2.3 billion ICC Arbitration in Paris between Sunrise, Federal Government of Nigeria (the “FGN”) and Sinohydro Corporation states.”

His petition reads in part: ”As a result of numerous attempts to fraudulently divert billions of dollars from the 3050MW Mambilla hydropower project (the “Project”) to a 1500MW solar power project, the execution of the 3050MW Mambilla hydropower project has refused to take off the ground.

“The reason being, China Exim bank’s insistence of compliance with due process, and terms of the November 2017 EPC contract signed with the Chinese JV Partners.

“Ironically, this fraudulent multi-billion dollar solar power project was rejected by the Federal Executive Council (the “FEC”) on the 16th of August 2017 when it was fraudulently packaged with the Mambilla hydropower project as one project.

“The Solar Power project was submitted without any Feasibility studies, Environmental Impact Assessment (EIA) reports, NASS budget approvals, and without any bid process (due process) in the selection of the proposed EPC contractor(s) for both the 3050MW Mambilla hydropower project and the 1500MW Solar Power project.”

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