$5.8bn Mambilla project: Firm waives $500m penalty for Nigeria, FG celebrates

IN an act of rare patriotism, original awardee of the botched $5.8 billion Mambilla hydro-electric power project, Sunrise Power and Transmission Company Limited (SPTCL), has let Nigeria off the $500 million penalty hook incurred for multiple default on a $200 million settlement agreement. 

Leno Adesanya is the chairman and chief executive officer of the firm. 

Though Nigeria willingly entered into the out-of-court settlement in the course of arbitral proceedings at the International Court of Arbitration in Paris, France, it severally defaulted, resulting in over a half a billion-dollar penalty, which the country also signed up for. 

The firm also stood to claim close to a billion dollars in exemplary damages in its case against the country for unlawful termination of the contract, signed on May 22, 2003 and re-awarded to a Chinese firm, Messrs China Gezhouba Group Corpora- tion/China Geo-Engineering Corporation (CGGC/CGC). 

It had launched a series of judicial counter to the termination of the contract on May 28, 2007, culminating in a 14-year delay, with the new awardee effectively barred from resuming the execution of the contract. 

After a prolonged hiatus, the administration of President Muhammadu Buhari finally gave a firm commitment to the original agreement to settle out of court, for the new contractor to resume on site for the project estimated to generate 1,525MW at completion. A senior Nigerian lawyer reportedly undertook the peace mission to the seat of power, drumming it in the ears of the powers-that-be that nothing would move on the stalled mega-project if the agreement with Sunrise was not honoured. 

The presidency was reportedly told in clear terms that the Chinese contractors that won the re-award of the contract for the project would not commit a dime if the litigation was not seen off. 

While the Federal Government was ready to play, the ball was in the court of the original awardee and with Nigeria already defaulting multiple times, the firm was due all the penalty and original settlement sum, but it chose to stay with the original agreement, which was about a third of what it should have received. Attorney-General of the Federation and Minister of Justice, Abubakar Malami, alluded to the fact that Nigeria could have lost about a bil- lion dollars to the case. 

In an interview with Arise TV, he said there was cause for celebration on the Mambilla litigation resolution, because the move by Sunrise to discontinue arbitral proceedings in France had paved the way for the power project to come back to life. 

President Buhari had directed the Nigeria Sovereign Investment Authority (NSIA) to “source” and pay $200 million to Sunrise. It was learnt that the latest agreement to pay the firm the agreed sum at a go included a caveat for new penalty if Nigeria should default again. 

The penalty this time is to be added to the $200 million and would be running until the liability is discharged.

In celebrating the new deal, which Dr Kayode Ajulo, a fellow of the Chartered Institute of Arbitrators, United Kingdom, calls Nigeria’s best so far, Malami noted, “Sunrise had withdrawn its pending arbitral proceedings in respect of which it was claiming against the interest of the Federal Government an amount owed in the region of around $1 billion. 

“So, as it is, the only impediment to Mambilla project, which had been the pending litigation that stopped investors from investing in it, had been effectively displaced with the discontinuance of the arbitral proceedings by Sunrise. 

“So, the information that calls for celebration is that there is no pending impediment relating to Mambilla project, with the discontinuation of the proceedings in Paris.” 

In an electronic statement made to Nigerian Tribune, Ajulo said, “Understanding how arbitration operates would give insight to this extant settlement. 

Since the funder, Chinese Exim Bank and the contractor Syno Hydro Company, are really pushing for the settlement agreement as failure to do so will not allow them to proceed further on the con- tract, it is imperative for the government to honour its negotiation out of the pending arbitration in Paris with Messrs Sunrise Company, as a consent arbitral award to end the matter. 

“The claim and any other ancillary expenses and or interest from the date the settlement agreement was signed, to date, is the best negotiation the government has ever made. 

“If the government continues with this matter, with the persistent breach of its executed settlement agreement, it will culminate in another P&ID saga. 

“There should be an end to litigation, parties must resolve the issue and get to work from which the Nigerian government and people will mainly benefit.” 

Pekun Adeyanju, an expert and former staff of Ikeja Electric, said it was an unfortunate situation having the power project stalled for over 30 years. He bemoaned the way the project was abandoned, saying government left the project, “which has been on board for 30 years to lie down without doing anything about it.” 

Now that the coast is clear, he urged the Federal Government to execute the project, adding that resources should be deployed for immediate implementation. 

On the importance of the power facility, he pointed out that it was linked with a dam that has a continuous flow of water. 

“If it comes on board, there won’t be any need for gas shortage. This is the advantage of the project,” he said. 

The addendum, which is the subsisting terms of agreement, is dated March 25, 2020, with the then Minister of Power, Mamman Sale and the Attorney-General of the Federation and Minister of Justice, Mr Abubakar Malami, witnessing for the Federal Government. Adesanya and Sunrise legal counsel, Jeremie Chouraqui, witnessed for the company.

 

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