FG funds early works for N2trn Mambilla hydropower, despite legal issue

The Federal Government has said the funding for early works of
resettlement and surveys is ongoing for the $5.72 billion (about N2
trillion) Mambilla hydropower project in Taraba State expected to
generate 3050 megawatts (MW).

There have been legal crisis by acclaimed local partner, Sunrise
Power and Transmission Company, that could derail the kickoff of
the project in 2019, Daily Trust reports.

However, the minister of Power, Works and Housing, Mr Babatunde
Fashola, on Saturday night in a televised response to the crisis
said the President Muhammadu Buhari administration does not want
middlemen or ’10 percenters’ for the project, describing Sunrise’
claims as baseless.

Giving a ray of hope, he said: “We had provision for our
counterpart funding in the 2018 budget and we have also done so in
the 2019 budget. Our contribution to even start the early works,
planning the surveys, resettlement is going on.

“The president has approved that part of that money should come
from the Infrastructure Development Fund funded by the Nigerian
Sovereign Investment Authority (NSIA),” the minister stated.

Tales around Mambilla

The 3050MW Mambilla hydropower project was originally 2600MW
when it was conceived and had been on the drawing board for about
40 years. It had seen controversies since 2003 and was at the point
of being flagged off in 2014 before it fell for another legal
hurdle.

The Federal Executive Council (FEC) on August 30, 2017 approved
the award of the contract to Messrs China Gezhouba Corporation
(CGC), Sinohydro Corporation Limited and CGOC Group Limited.
Fashola then signed the $5.72bn contract with the firms in November
2017.

It is expected to be completed in about 60 months if it begins
in 2019 as been projected.

Fashola said 116 local firms have expressed interest to provide
finance consultancy, logistics and security services within the six
year construction period.

Mr Fashola in November 2018 said the Federal Ministry of Finance
was concluding negotiation for the financing with the Chinese
Export Import (EXIM) Bank for an 85 per cent level and a 15 per
cent counterpart funding from Nigeria.

Exclusion: Sunrise Power kicks

In a November 2018 petition to President Muhammadu Buhari by the
Chairman/CEO of Messrs Sunrise Power and Transmission Company, Mr.
Leno Adesanya, said it was excluded after it was awarded the Build
Operate and Transfer (BOT) contract in 2003 but was sidelined as
the local partner during the contract signing.

It said the issues surrounding the project are now before the
International Criminal Court (ICC) Arbitration Panel in Paris. The
litigation was also captured by the website of the Federal Ministry
of Power, Works and Housing accessed while compiling this
report.

It said: “The Mambilla project is currently a subject of
litigation instituted by Messrs Sunrise Power & Transmission Ltd.
The issue in dispute is a claim by the plaintiffs that a subsisting
contract for the construction of the Mambilla Hydroelectric Power
Project on the basis of a BOT concession exists in their
favour.”

Daily Trust learnt that the Attorney-General of the Federation
and Minister of Justice, Mr. Abubakar Malami, had in a 2017 memo
recommended to then Acting President, Prof. Yemi Osinbajo, that the
prior interest of the local partner, Sunrise Ltd be
accommodated.

The firm also alleged that part of the funding for the Mambilla
project was to be used to build a 1,500MW solar power project
which, it claimed, was not in the original plan for the
contract.

Sunrise contract claims baseless, agents don’t add value
– Fashola

In his response, Mr Fashola on Saturday night said commission
agents like Sunrise don’t add value and that it was excluded from
the Mambilla contract because the Federal Government never awarded
any contract to Sunrise Power.

He said: “Nigeria’s economy has been challenged by people who in
the past acted as commission agents, brokerage agents, 10
‘percenters’ who really don’t add value. So who is this contractor
who claims that he has a contract? What has he built before to be
entrusted with a $5bn project?”

Fashola explained that the FEC on May 21, 2003 rejected a memo
for the contract award to Sunrise Power by the then minister of
Power, adding that “No decision to award the contract was taken at
that meeting. They gave the minister directives to go and do other
things and come back with the memorandum.”

The minister further said the same minister on May 22, 2003
however conveyed a ‘FEC approval’ letter to Sunrise saying “that
FEC had approved the contract that was not approved. And within 24
hours, the contractor was purported to have accepted the
contract.

“Six months later, after that minister was changed, the new
minister for power then said there was no agreement to this effect,
am cancelling the contract. That is the contract that this
contractor has kept around since 2003, claiming under the PDP
administration that he has a contract,” Fashola stated.

He said on assumption in 2015, government got the Chinese
contractors from the court and they were made to sign a joint
venture agreement. It then became an issue of Nigerian government
with the Chinese government, using Chinese contractors to be funded
by China Export Import (EXIM) Bank. “So in a government to
government relationship, where is the middleman’s role,” the
minister queried.

‘No injunction stopping Mambilla project’

The minister, who questioned the character of Mr Adesanya of
Sunrise Power said: “The MT Tuma case during Ibrahim Babangida’s
administration when I, remember they said a vessel load of petrol
was missing. If my memory is correct, I think there were criminal
charges at the time, I don’t know how they were concluded.”

Fashola also said there is no injunction stopping the project.
“President Buhari is saying we are dealing with legitimate
businessmen and the period of percentage and brokerage is over.
That is the truth. There is a court case but there is no
injunction.

“I went with the former Minister for Finance, Mrs Kemi Adeosun,
to negotiate with the China EXIM Bank and we brought up this
arbitration issue and they said it wasn’t an issue for them that
they are going to deal. But in structuring the finance, there is
going to be some hurdles to cross because it is a big project,” the
minister said last weekend.