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Adewale Sanyaolu
If you were born in 1972 when the Federal Government initiated the Mambilla Power project, you are about today 47 years, perhaps married with children and also working too.
Unfortunately, one of the dream projects expected to improve the quality of life of the people and which ought to have been delivered in less than 10 years of incubation is still in its pipeline stage with Nigeria’s estimated 200 million citizens waiting endlessly for the elusive uninterrupted power in nearly 60 years of independence.
Unknown to most Nigerians, the Mambilla Hydro power project on completion will be the nation’s largest power plant. But the project could only advance after 35 years when China’s Gezhouba Group was awarded a contract to develop its 2,600MW installed capacity in 2007. The ground survey for the project was completed in August 2010 with environmental approval received in December 2011. However the project’s capacity was increased to 3,050MW in 2012. From that time, the Mambilla Power project has been put on hold due to administrative glitches, until it received government’s approval in 2016.
According to the Minister of Power, Sale Mamman, the 3,070 megawatts project which was expected to boost the national grid currently struggling with a lean 4000 megawatts of power over the years, is undergoing the Environmental Impact Assessment (EIA), an early stage civil engineering work in construction.
Not even the booms and burst that included the oil windfall of the Ibrahim Babangida years, up to the Olusegun Obasanjo administration where over $16 billion was said to have been spent, the project could not advance beyond the EIA stage leaving no one in doubt that funding could not have been an issue but perhaps one of a deep -rooted public sector corruption that has remained the bane of Nigeria’s economic development.
Over these years, China which won the bid to deliver the project has built several world class power projects that has raised its economy to become the second largest in the world after that of the United States of America.
Besides theMambilla power project, several of Nigeria’s signature projects including the Ajaokuta Steel Rolling Mill, Aluminum Smelter Plant in Ikot Abasi, and the Iwopin Paper Mill among others have failed to function optimally years after inauguration despite several billions of dollars sank into them.
The case of Nigeria’s $5.8 billion Mambilla power project remaining a pipeline for 47 years with humongous capital allocations yearly raises questions as to what was the objective of various administrations that supervised and funded the national white elephant project.
Today the Mambilla Power project looks every inch a still-born with the Nigerian government unable to even provide its counterpart funding required to enable China Exim Bank make available its 85 per cent share in compliance with due process and terms of the November 2017 engineering, procurement and construction contract signed with the partners. Another source of delay to the 3,070 megawatts electricity project is the much- awaited outcome of an arbitration against the project. The Mambilla power project was conceived to aid the country’s power generation and boost industrialisation, especially in the northern part of the country.
It was learnt that the Minister of Power, Sale Mamman and his Water Resources counterpart, Mr. Suleiman Adamu, had during a meeting with the Chinese Ambassador to Nigeria pleaded with him to help fasttrack the release of the project loan from China Exim Bank.
The delay in the release of the project loan by the Chinese may not be unconnected with the inability of Nigeria to provide its own share of the counterpart fund and the ongoing arbitration on the project.
This was even as Mamman assured the Chinese authorities there was nothing to be worried about on the project as the Federal Government was working hard to remove all impediments that could threaten the delivery of the project.
Mamman insisted that the Chinese government had enough influence to impress it on China Exim Bank to hasten the process as the project could not be frustrated by any arbitration.
Adamu said the environmental impact assessment exercise on the project was being carried out while a memorandum of understanding has been signed with the Taraba State government for the payment of compensation to owners of land at the project site.
He assured the envoy on the release of an interim fund of two hundred million dollars by the Nigerian Sovereign Investment Agency, assuring that the Ministry of Justice was already working on a comfort letter to the China Exim Bank as part of the Federal government’s commitment.
He further assured the envoy that, although arbitration was still ongoing with a previous investor on the project, the government was ready to indemnify any funds agreed after the arbitration without affecting the loan agreement with Exim Bank.
For the Chinese Ambassador to Nigeria, Dr. Zhou Pingjian, China does not encourage white elephant projects even as he advised the Ministers to encourage the direct participation of Chinese government or companies in some of its ventures to reduce much borrowing and facilitate easier execution of projects.
He said the China Exim Bank was already investing over $2.6 billion in various projects in Nigeria, including the Abuja greater water project, airport expansion and the Abuja-Lafiya-Makurdi highway project and would no longer participate in projects with hazy delivery timelines.
A shocking revelation of the Nigerian’ government lack of commitment to the Mambilla project was made when a former Minister of Power Works and Housing, Mr. Babatunde Fashola, told a Ministerial screening panel at the National Assembly that there has not been a contract in place for the execution of 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 47 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.
But, barely a year after the signing of an agreement for the construction of the Mambilla hydropower project, the contract was enmeshed in an intricate legal crisis.
The legal hitch followed alleged moves by some forces in government to sideline the local content partner, Sunrise Power and Transmission Company Limited (SPTCL) which was awarded the build operate and transfer (BOT) contract for the project in 2003.
Today, the issues surrounding the project are now before the International Chamber of Commerce (ICC) Arbitration Panel in Paris, France, over an alleged breach of contract.
Although an amicable resolution of the legal dispute has been proposed, it was learnt the project might remain stalled, unless President Muhammadu Buhari intervenes. The $5.7 billion Mambilla hydropower facility has been stalled over unresolved legal issues and funding disagreements involving the Nigerian government and the local content partner, SPTCL.
SPTCL is now making the following claims for being excluded from the final contract:
•Wasted expenditure, over $100 million;
•Loss of profit as content partner, $565 million;
•Loss of the commission due by Sinohydro to Sunrise, $855 million;
•Loss of profit that would have been made through the resettlement contract, $525 million;
•Loss of reputation, over $25 million.
The chief executive officer of SPTCL, Mr. Leno Adesanya, alleged that his company was sidelined in the project by the Ministry of Power, in a series of petitions to President Buhari, Vice President Yemi Osibanjo, Attorney-General of the Federation and Minister of Justice Abubakar Malami, and Babatunde Fashola, former minister of power.
SPTCL, which claimed to have been awarded the BOT contract in 2003, said some “vested interests” in government had, in 2017, signed another contract with three Chinese companies, Sinohydro Corporation of China, China Ghezouba Group Corporation of China and China Geo-Engineering Group Corporation, to form a joint venture for the execution of the project.
The local content partner had accused Abba Kyari, Chief of Staff to the President, of taking the unilateral decision to remove the company from the contract. SPTCL also accused Fashola of reneging on his promise to support the project.
Adesanya claimed the company had spent millions of dollars with financial and legal consultants to raise about $6 billion for the execution of the project, yet the company has suffered a lot of setbacks over the years “through improper administrative interruptions and interventions.”
The China Exim Bank, which was expected to provide 85 per cent of the joint funding along with the Federal Government for the Mambilla project, insisted on compliance with due process and terms of the November 2017 engineering, procurement and construction contract signed with the partners before releasing funds.
Sensing an imminent legal crisis, Malami, in a July 24, 2017, letter to the then Acting President, Osinbajo, recommended that the interest of the local partner 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 have been trying to shut out the local content partner.
The power play in government over the local content partner has now created a major hurdle for the Chinese consortium.
But, Fashola recently denied reports that the Mambilla power project has been stalled due to an attempt to divert funds.
In a statement, the minister’s spokesperson, Hakeem Bello, had said the Federal Government never awarded a contract for the Mambilla power project to SPTCL.
He described the claims made by Adesanya as fictional.
However, Bello said available evidence does not support Adesanya’s claims, adding that he was making a desperate attempt to destabilise the project from coming to fruition.
“The attention of the Minister of Power, Works and Housing has been drawn to the spurious and unfounded allegations of Leno Adesanya with regards to the ongoing Mambilla Power Project,” the statement read.
“Nothing is more further away from the truth than the claim that the loan negotiations have stalled since 2017 because of an attempt to utilise $600 million (equivalent of N219 billion) from the 3,050MW hydropower project for a ‘pet project’ not hitherto considered by the Federal Executive Council
“There is currently no budgetary provision or cash provision of $600 million or the N219 billion in any budget of the Federal Government for the Mambila Project. Therefore, you cannot attempt to divert what does not exist…”
