In a saga that has left Nigeria’s energy sector grappling with uncertainty, the long-running legal dispute surrounding the $6 billion Mambilla Hydroelectric Power Project continues to threaten the nation’s energy future, keeping millions of Nigerians in the dark.
The Mambilla Hydroelectric Power Project, located in the Taraba State region of Nigeria, is envisioned as a key piece in the country’s energy future. Once completed, it is expected to generate 3,050 megawatts of electricity, making it one of the largest power plants in Africa.
For context, it was potentially the largest hydroelectric power plant in Africa before Ethiopia’s more recent Grand Renaissance Dam of 6,450MW.
Read also: Court remands Nigeria’s former minister of power in prison over $6bn Mambila deal
However, more than two decades since its inception, the project has been bogged down by endless delays, funding issues, and most notably, a bitter legal dispute that has paralyzed its progress.
How it started
The journey of the Mambilla Hydroelectric Power project began in 2003 when the Federal Government of Nigeria, following an international bidding process, awarded a $6 billion Build, Operate, and Transfer (BOT) contract to Sunrise and its consortium of Chinese partners. With the project now on the horizon, the Sunrise consortium secured a loan of $5.5 billion from the China Eximbank in 2005 to fund the venture.
However, in 2007, the Federal Government annulled the original contract and instead entered into a $1.46 billion civil works agreement with the Chinese firm China Gezhouba Group Corporation/China Geo-Engineering Corporation (CGGC/CGC). This decision was made in direct violation of the existing BOT contract with Sunrise.
In response, Sunrise initiated multiple legal actions to challenge the termination of the contract, which resulted in a drawn-out 14-year delay, preventing the new contractor from moving forward with the project. In November 2007, Sunrise filed a formal petition with President Umaru Yar’Adua, and, by 2009, the $1.46 billion EPC contract was rescinded.
Read also: Buhari’s appearance in Paris court over Mambila Power project done willingly – Presidency
A breakthrough came on November 23, 2012, when the Nigerian government signed a General Project Execution Agreement (GOEA) with Sunrise and its Chinese consortium partners, authorizing them to proceed with the Mambilla project. Despite this, the Federal Government, on November 12, 2017, entered into a separate $5.8 billion EPC contract with another Chinese consortium. This move took place despite multiple written cautions from the Attorney-General of the Federation in 2016 and 2017, advising the Ministry of Power, Works, and Housing to honor the GOEA agreement with Sunrise.
Sunrise pursues arbitration
In 2018, Sunrise took the matter to the International Court of Arbitration, under the auspices of the International Chamber of Commerce (ICC), seeking $2.3 billion in damages from both the Federal Government and the Sinohydro Consortium.
After intervention by the Chinese government, a special envoy was sent to former President Muhammadu Buhari in July 2019. This led to a settlement agreement between the Nigerian government and Sunrise in January 2020. However, this agreement was conditioned on approval from the Chinese Ambassador to Nigeria and the Chairman of China Eximbank, as it was tied to future project financing. Unfortunately, the Federal Government failed to honor the terms.
To demonstrate goodwill, Sunrise withdrew its $500 million arbitration claim in September 2021, on the condition that the Federal Government make a financial commitment to the project and recognize Sunrise as the exclusive local content partner. Yet, the Federal Government again failed to meet its financial obligations, including payments to the EPC contractors and contributions to the counterpart funds for China Eximbank. On October 13, 2022, the ICC ruled once more against the Nigerian government, dismissing its objections.
Allegations of fraud
In 2023, as the matter remained before the ICC, the Nigerian government, through the Economic and Financial Crimes Commission (EFCC), levelled accusations of fraud in relation to the Mambilla Power project.
Specifically, the EFCC alleged that Olu Agunloye, the former Minister of Power and Steel, awarded the initial $6 billion contract to Sunrise on May 22, 2003, without securing budgetary provisions, formal approvals, or the necessary financial backing.
Additionally, Agunloye was accused of accepting a bribe of N3.6 million on August 10, 2019, from Sunrise and its Chairman, Leno Adesanya, as a kickback for the contract.
Obasanjo’s comments
In 2023, former president Olusegun Obasanjo challenged his former minister of power, Olu Agunloye, to tell Nigerians where he derived the authority to award the contract to Sunrise in 2003.
Read also: Senate probes stalled $5.792bn Mambilla Power Project
“When I was president, no minister had the power to approve more than N25 million without express presidential consent. It was impossible for Agunloye to commit my government to a $6 billion project without my permission and I did not give him any permission,” Obasanjo told TheCable.
“If a commission of inquiry is set up today to investigate the matter, I am ready to testify. I do not even need to testify because all the records are there. I never approved it.
“When he presented his memo to the federal executive council (on May 21, 2003), I was surprised because he had previously discussed it with me and I had told him to jettison the idea, that I had other ideas on how the power sector would be restructured and funded.
“I told him as much at the council meeting and directed him to step down the memo. I find it surprising that Agunloye is now claiming he acted on behalf of Nigeria. If I knew he issued such a letter to Sunrise, I would have sacked him as minister during my second term. He would not have spent a day longer in office.”
Buhari to appear in court
BusinessDay’s findings showed Buhari is expected to appear in court on Monday to testify in international arbitration over breaches of the $6 billion Mambilla Hydroelectric Power Project contract.
According to the Cable, Obasanjo is also in France to give his testimony.
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