Home > Chemical > $5.7bn Mambilla Hydro Power Project: 45 Years After, Fails To Deliver 3,050MW

$5.7bn Mambilla Hydro Power Project: 45 Years After, Fails To Deliver 3,050MW

About 45 years after the Federal Government conceived the idea of Mambilla hydro power plant, Nigerians are grumbling in disappointment that the $5.7 billion 3,050 Mega Watts electricity project which has gulped several billions of naira was still at its teething stage.

The initiative, which was first mooted in 1972, was aimed at increasing the country’s power generation to boost industralisation, especially in the northern part of the country.

However , since 1972, successive governments have made budgetary provisions for the take-off of the project without wheeling out a single mega watt of electricity generation.

The projects which have suffered series of setback as a result of bureaucratic bottlenecks arising from legal battles from contractors and land owners who felt shortchanged further led to rude setbacks.

Immediate past Minister of Power Works and Housing, Mr. Babatunde Fashola, had at a Ministerial screening in the National Assembly shocked most Nigerians when he said there has not been any contract in place for the Mambilla power project by successive administrations.

He said his was the first time a contract for the execution of the project was being put in place by the Buhari administration, adding that after 45 years the contract was now at the stage of site demarcation and space allocation to determine communities that would be paid compensation.

On August 30, 2017, the Federal Executive Council, FEC, presided over by President Muhammadu Buhari, approved $5.792 billion (about N1.140 trillion) for the construction of the 3,050 megawatts Mambilla Hydro-Power project at Gembu in Taraba.

Fashola, had while addressing State House correspondents alongside the ministers of labour and employment as well as the minister of sports, on the outcome of the Council’s meeting said; “The memorandum from the Ministry of Power, Works and Housing was to the award of the Mambilla Hydro-Power plant. I believe that many of you have heard of this project.

Nigeria started talking about it since 1972; that is about 45 years ago.

Several efforts had been made to bring it to reality but I’m happy to announce that this government approved the contract today to joint ventures of Chinese Civil and Engineering company for the engineering and turn-key contract, including civil and electro-mechanical works for $5.792 billion.

“The construction should take about 72 months (6 years),” he said.

According to him, the scope of works of the project will include the construction of four dams and 700 kilometres of transmission lines.

The minister said the project, when completed, would boost the nation’s economy as it would unleash the potential that had been reported about Mambilla in the fields of agriculture, tourism and energy.

“It will also help Nigeria strike a very big blow on the climate change issue and fulfill its commitment under the Paris Agreement, because this is going to be renewable energy, coming also at a relatively competitive cost.

Fashola said the project would be jointly financed by the Federal Government and the China Export Import Bank which will provide 85 per cent of the cost while the government would provide 15 per cent.

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Back in 2018, and barely a year after the signing of an agreement for the construction of the $5.792billion (about (N2.096trillion) Mambilla hydro-power project,  the contract was enmeshed in a legal crisis.

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) having approved the award of the project to Messrs China Gezhouba Corporation, Sinohydro Corporation Limited and CGOC Group Limited, was looking forward to speedy completion

During a state visit to China on September 7, 2018, the President of CGCC, the construction company, Prof. Lyu Ze Xiang, told Buhari 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, in 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, 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 rather than 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 now 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 Buhari 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.

Partner, Bloomfield Law Practice, Dr. Ayodele Oni, said the challenges have included the legal tussle as to who is entitled to rights over the project.

‘‘I understand that a particular company had won the bid and there was an attempt to have another party (who is claimed to have not submitted the winning bid) to develop the project, instead. There have also been disputes around the initial project design.

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It now appears that political solutions have been found for those initial problems. The challenges now revolve around how to raise funds for the project, and whether the grid can  accommodate that volume of power in light of existing generation and stranded capacities.

He said further, that the jury is still out to determine whether the discos can take additional power, believing the solutions relate to ensuring the liquidity of the entire value chain, making tariffs, cost reflective and effectively metering and substantially reducing electricity theft even before adding new generation.

In fact, it may be pertinent to first deal with stranded generation capacity too.

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”) of August 16, 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.”

”Your Excellency’s commitment to expeditiously execute the Project in June 2015 was communicated by the Honourable Attorney-General of the Federation, Mr. Abubakar Malami SAN (the “HAGF”) to the Honourable Minister of Power, Works and Housing (the “HMOPWH”) Mr. Babatunde Fashola on May 20, 2016; when the AGF directed the MOWPH to comply fully with all existing agreements between the Federal Government of Nigeria (the “FGN”) and Sunrise; basically the out-of-court Settlement, and the General Project Execution Agreement(s) of November 25th 2012.

”In view of the Presidency’s invitation for CGCOC (formerly CGC) participation in the Project, we petitioned Your Excellency, MOPWH, and AGF in April 2017 with evidence of previous corrupt practices CGC in May 2007 when they paid millions of dollars to a very senior Presidency official to enable CGGC/CGC sign a $1.46 billion Mambilla Civil Works contract on May,28 2007, as one of the $16 billion Nigerian Integrated Power Project (the “NIPP”) power projects.

Source: The Sun

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