Power Firm’s Fresh $400m Demand Delays $5.8bn Mambilla Project Take-off

Emmanuel Addeh in Abuja with agency report

The planned take-off of the 13,000MW Mambilla Hydropower Project, located in Taraba State, has again run into troubled waters with another legal hurdle being mounted by Sunrise Power and Transmission Company (Limited (SPTCL), which is claiming a breach of contract by the federal government.

It was gathered that the Nigerian company which lost out on a contract to build the multi-billion-dollar plant has filed a $400 million arbitration claim against the government, further hampering the country’s plans to access Chinese financing for the project.
SPTCL is accusing the government of reneging on a settlement accord agreed last March that was supposed to resolve a long-running dispute over the rights to construct the Mambilla facility.

The company, Bloomberg reported, has filed a case at the International Chamber of Commerce (ICC) in Paris asking the tribunal to order the President Muhammadu Buhari’s administration to honour the agreement, its lawyer Femi Falana (SAN) told the news medium.

Export-Import Bank of China had agreed to help fund Mambilla, but has insisted that it won’t release the money until the legal standoff ends.

Plans to develop the plant on the Donga River in the eastern Taraba state dates back to the early 1970s, but the project has got off to multiple false starts.

Initially intended to be a 3,050-megawatt facility that would cost $5.8 billion, the power ministry said it scaled back the scope of the project to improve its “bankability.”

Former Power Minister, Babatunde Fashola (SAN) had announced in 2017, that China Eximbank would finance 85 per cent of the cost of Mambilla, and that it would be built by Sinohydro Corp., China Gezhouba Group Co. and China Geo-Engineering Corp.

But a memo written by the Chinese contractors to Mamman in September 2019 stated that Eximbank couldn’t enter “substantive financing negotiations” while the development is encumbered by legal disputes.

China’s top diplomat and a ruling Politburo member, Yang Jiechi, then notified Buhari the same month that the funding can’t be disbursed until the tussle with Sunrise ends, according to the memorandum.

The power ministry first granted Sunrise the contract to build Mambilla in 2003, a deal the Federal Executive Council (FEC) declined to approve. The company has asserted a claim to the project ever since, first in a Nigerian federal court and more recently through international arbitration.

After Fashola finalised the arrangement with the three Chinese firms, Sunrise started proceedings against the federal government at the ICC, demanding between $960 million and $2.4 billion in damages.

It, however, suspended the case to participate in the settlement talks encouraged by Jiechi.
Last year, Mamman and the Attorney General of the Federation (AGF), Abubakar Malami, concluded two agreements with Sunrise that committed the government to pay $200 million to the Lagos-registered company in return for it dropping all claims relating to Mambilla.

The agreement indicated that the company would be entitled to an additional $200 million plus interest if the government failed to transfer the agreed sum within 180 days, according to the second accord signed in March, which was seen by Bloomberg.

But the federal government has said that it cannot pay the settlement sum, according to a memo Malami sent the president in August last year, at a time when low oil prices were hammering government income.

Sunrise hasn’t received any money “despite numerous commitments from the involved ministers and a surge in oil prices,”Bloomberg quoted Falana as saying.

The company’s request for an award of $400 million plus interest of 10 per cent has been initiated under the ICC’s expedited procedure rules, as specified in the agreements, and should be adjudicated within six months, he said.

Malami’s memo to the president stated that Sunrise is “in a strong legal position to pursue a successful claim” having not been “duly disengaged as contractor.”

Further delays caused by the dispute could also have “major negative political implications” because Mambilla is a “signature project” for the president’s administration, Malami was quoted as saying in the letter.

Mamman recently stated that activities such as land acquisition and public awareness raising were underway at the project site location.

Speaking through his Special Adviser on Media and Communications, Mr. Aaron Artimas, on the latest move by the company, the minister noted that the fresh arbitration was not necessary, stressing that everything was being done to resolve the issues.

“There is no reason for an additional arbitration or court case. The government is working to find an amicable solution with Sunrise. The government is on course and remains committed to the project,” the minister said.

However, before the latest alleged breach of agreement, then power minister, Mr Babatunde Fashola, had contended that there was no breach of contract as Sunrise had not done any work to warrant any demand or arbitration, further questioning the integrity of the contract.