BusinessDay
Nigeria's leading finance and market intelligence news report.

Mambilla project to resume as power, water ministries renew cooperation

… legal, financial constraints still challenge

The exit of Sale Mamman, former minister of power, paves the way for the ministries of Water Resources and Power to work collaboratively on the Mambilla Power Plant and other projects, one thorny issue now removed from the litany of obstacles on the path of the billion dollar project.

Industry sources told BusinessDay that Abubakar Aliyu, the new minister of power, and Suleiman Hussein Adamu, minister of water resources, with similar expertise in engineering and a warmer relationship, have agreed to work together to get the project, stalled for over three decades, back on track.

This is significantly different from the situation under Mamman, where both ministries were at loggerheads because their principals could not see eye to eye even though the initial concept of the administration was to have a joint project, but the Ministry of Power under Mamman, wanted to go it alone.

However, this does not mean that the project is now free of all encumbrances. It is still confronted with legal dispute, financing challenges, and even the road to the Mambilla is not motorable.

Conceived over three decades ago, the Mambilla Power Project is a hydroelectric project designed to add 3050mw of electricity to the national grid.

In 2003, the Federal Government awarded a $2.3 billion contract for the construction of the plant to Sunrise Power Transmission and Procurement Company Limited (SPTPCL).

Read also: Maltina encourages Lagosians to explore water transportation

The contract with Sunrise Power was terminated in 2017 and re-awarded to three Chinese companies, Sinohhydro Corporation of China, China Ghezouba Group Corporation and China Geo-Engineering Group Corporation, to form a joint venture for the execution of the project.

Sunrise dragged the Federal Government to the International Chamber of Commerce Court of Arbitration in France asking for $960 million in damages.

Both parties settled out of court and Sunrise accepted a settlement of $200 million to be fully paid by August 2020. But President Buhari in April this year said “the government does not have the money to pay.”

This forced Sunrise Power in June to file a fresh $400 million lawsuit at the International Court of Arbitration (ICA), which operates under the auspices of the International Chamber of Commerce (ICC), in Paris, France, against the Federal Government of Nigeria.

Mamman had in July announced that the project would be scaled down to 1,525mw with the cost pruned down to $4 billion.

“We discovered that 3,050mw is not feasible,” Mamman said, saying, “We have sent officials to China to review the project and the memo is on the table of Mr. President waiting for approval.

“The idea of rescoping the project is to make it bankable…

We need a project that can be paid for in the market. We are funding the project with a loan from a lender who is only interested in funding a project that can pay back the loan.”

Sources say the several hiccups suffered by the project may have contributed to Mamman’s removal from the cabinet.

However, some lawmakers say the Buhari government like its predecessors have not demonstrated the seriousness required to complete the project.

“If after 30 years it is just now that money has been provided for land to be demarcated, your guess is as good as mine about how serious the government is about taking off Mambilla,” Gabriel Suswan, Senate committee chairman on power, said in July.

The Federal Government has so far allocated resources to procure land and has directed the minister of finance and the attorney general of the Federation to resolve the issues with Sunrise Power.

Some reports claim the government had instructed the Nigeria Sovereign Investment Authority (NSIA) to source for the $200 million required to settle the Sunrise Power matter through the Presidential Infrastructural Development Fund (PIFD) – a fund designed to accelerate the completion of strategic projects, including the Mambilla project.

But the NSIA denied the reports last month in a statement issued by Titilayo Olubiyi, the organisation’s head of communications.

Analysts say regardless of these hurdles, without cooperation from the concerned government ministries, the project would not even move the needle.

The Mambilla plant was conceived in 1982, under the administration of late President Shehu Shagari, as a large roller-compacted concrete dam with 3 hydraulic tunnels totalling 33 kilometres with power generators capacity of 3050mw.

Other projects the new minister is expected to complete are the Kudenda Kaduna 215mw plant and the 10mw Katsina Plant.

 

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