$5.8bn Mambilla power project suffers setback as Chinese sponsor stalls funding
The $5.8bn Mambilla hydropower project, a 3.05GW hydroelectric facility that is to be developed on the Dongo River near Baruf in Kakara Village of Taraba State has suffered a setback which will not only push forward the expected date of operation but will also cost the country a loss of $2.3 billion as a result of litigation.
The project which is being undertaken by the Federal Ministry of Power, Construction and Housing, with the help of Chinese investments if completed, will be Nigeria’s biggest power plant as it is expected to produce approximately 4.7 billion kWh of electricity a year and generate up to 50,000 local jobs during the construction phase.
But due to alleged issues of compliance with due process, funding for the project has stalled as the China Exim Bank which is to provide 85 per cent of the required funding for the project has insisted on compliance with due process and the terms of a EPC contract signed with the Chinese JV Partners on November 2017 before releasing funds.
This stall in funding will set the 3,500MW Mambilla Power project which is a signature project of the President Muhammadu Buhari administration on power back and affect the expected take-off date.
And to avert any major problems that may put the project on permanent hold, Leno Adesanya, the Chairman and Chief Executive Officer of Sunrise Power and Transmission Company, the local content partner for the project has written series of letters to the relevant authorities to ask that the project be rescued.
Adesanya had written to Vice President Yemi Oshibajo while he was acting as president and the Minister for Power, Works and Housing, Mr Babatunde Raji Fashola as well as a petition to the International Court of Arbitration in Paris over arbitrary non-compliance with the contract signed with Sunrise.
He had in a petition to the President Buhari called for justice and the intervention of the president in saving the project as his company was removed as a local content partner to the project as a result of a unilateral decision.
“Mr President can save the project from being enmeshed in another controversy as it occurred during the government of President Yar Adua where a Presidential adviser allegedly took millions of dollars in bribes, and eventually led to the removal of the official and the termination of the $1.46b civil works contract,” said Mr Adesanya
He had alleged in his letter to Prof Osinbajo that on May 22, 2017, their Chinese partners had informed them that the Federal government had through the Chief of Staff, Mallam Abba Kyari instructed the Ministry of Power, Works and Housing that his company should not participate in the Mambilla Hydropower project.
He had also in the letter made an appeal, adding that “we have pleaded with our financial partners to be patient with the Federal government as the various developments that delayed the project played out. We are however constrained to observe that the latest developments, if not rectified in line with the recommendations of the Attorney General of the Federation prior to seeking FEC approval, shall leave us with no choice but to seek legal redress where appropriate.”
The Attorney General of the Federation, Abubakar Malami (SAN), had in a letter to Acting President Osinbajo dated July 24, 2017, had after intensive review of the pending legal issues recommended that “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 in the project.”
Adesanya had in a petition dated November 18, 2018 alleged that the Chief of Staff to the President, Abba Kyari invited three Chinese companies: Sinohhydro Corporation of China, China Ghezouba Group Corporation of China and China Geo-Engineering Group Corporation to the presidency and instructed them to form a joint venture for the execution of the project, alleging that without authorisation by the President, he had awarded the $5.8 billion contract to the parties, excluding Sunrise Power.
He concluded that the Federal Government might lose $2.3 billion in litigation if the President does not step into the matter urgently. “The execution of the 3050MW Mambilla hydropower project has refused to take off the ground because the China Exim bank had insisted that there should be compliance with due process and terms of the November 2017 EPC contract signed with the Chinese JV Partners.
The Mambilla plant when completed will boost the nation’s economy by unleashing the potential that had been reported about Mambilla in the fields of agriculture, tourism and energy.
The Works Minister had also stated that “It will also help Nigeria strike a very big blow on the climate change issue and fulfil its commitment under the Paris Agreement because this is going to be renewable energy, coming also at a relatively competitive cost.”