The Mambilla Debacle

For over four decades, the Mambilla hydropower project, located in Taraba state, has been in the works, at least on paper. In those years, every succeeding administration has mouthed how critical the project is to the ailing power sector in the country. Emmanuel Addeh writes that plans by the Muhammadu Buhari administration to see the take-off of the project appears to have hit a brick wall again.

Essentially, the Mambilla hydroelectric project was originally conceived in 1972, but some form of progress was made in 2007, 35 years later when China’s Gezhouba Group was awarded a contract to develop the project with 2,600MW installed initial capacity.
With the ground survey for the project completed in August 2010 and environmental approval in December 2011, the capacity of the project was thereafter increased to 3,050MW in 2012.

The project was, however, put on hold due to administrative clashes, until it again received government approval in 2016 when the Federal Ministry of Power Works and Housing awarded the project development contract to a consortium of three Chinese companies, including the Gezhouba Group, in November 2017.

Set up to comprise four dams and two underground powerhouses having 12 turbine generator units in total, as part of the plans to solve the perennial problem in the power sector, the Olusegun Obasanjo ressurected the project during his first term. But since then, it has been from one obstacle to another.

A contract for the construction of a 3, 960MW Hydroelectric Power Project in Mambilla was on a Build, Operate and Transfer (BOT) arrangement for a provisional $5.8 billion.
In August 20, 2003, Sunrise, according to available information, engaged Sinohydro to construct the project on an Engineering, Procurement and Construction (EPC) basis, but work was stopped when the firm got the information that the Federal Executive Council did not approve the memo recommending it for the project and directing Sunrise to tender for the project when it is advertised. Mambilla, expected to be Nigeria’s biggest power plant, producing approximately 4.7 billion kWh of electricity a year, will generate up to 50,000 local jobs during the construction phase. From the now stalled arrangement, the Chinese Export Import (Exim) Bank is funding 85 per cent of the estimated $5.8bn project cost, while the remaining 15 per cent funding will come from the federal government.
The engineering, procurement and construction (EPC) contract for the Mambilla Hydropower project was awarded to a joint venture between China Gezhouba Group (CGGC), Sinohydro and CGCOC (formerly CGC Overseas Construction), in November 2017.

Why Mambilla Must Work

A complex of four dams and two underground stations in the eastern Nigerian state of Taraba, the dam will be Nigeria’s largest power plant at 3,050MW and if all plans go well, which doesn’t look likely, as it is supposed to be completed by 2027. Apart from creating thousands of jobs directly, and enabling the growth of many more through more reliable energy services, Mambilla will have a number of additional benefits.

These include the fact that it is a low carbon electricity and with the renewed drive to cleaner energy, will help Nigeria achieve its Vision 30:30:30, when it hopes to achieve 30 per cent renewable energy and 30GW capacity by 2030.

Since the power transmission network is still very weak, and if not upgraded before Mambilla comes on stream, some power could be exported through the West African Power Pool (WAPP), a group of 14 member countries and 27 national utilities.

Experts further believe that building this market could save about $5 to $8 billion per year regionally and will further allow for greater direct-use through irrigation and farmland development to improve agricultural production and food security. Aside aiding agriculture, manufacturing, and tourism and help to control flooding, improve irrigation, as well as promote recreational activities, the proposed 3050MW, which has now been scaled down to 1,525 MW and $4 billion has literally speaking, seen trouble from all sides. Recently, a World Bank report revealed that businesses in Nigeria lose about $29 billion annually as a result of the country’s erratic power supply. If Mambilla works, this will be considerably reduced.

Lawmakers Express Anger

When members of the House of Representatives Committee on Power, visited sometime ago, they expressed anger over the inability of the multi-billion project to commence operation, over 48 years after the facility was initiated. The lawmakers maintained that if not meticulously monitored, the project located in Taraba State, might go the way of the almost $500 million Abuja Closed Circuit (CCTV) contract, which was fully funded, but never saw the light of day.

The project had been awarded to different contractors with huge monies expended, but had encountered several set-backs, prompting former President Olusegun Obasanjo to re-award it in the twilight of his administration and subsequently cancelled by late President Umaru Musa Yar’adua.

In 2017, under President Muhammadu Buhari, the project was again awarded as a Joint Venture to Chinese firms for about $5.792 billion to be partly funded by the China Export Import (EXIM) Bank as a concessionary loan.

Speaking during an oversight assignment to the power ministry, Chairman, House of Representatives Committee on Power, Magaji Aliyu who led other lawmakers, expressed surprise that though billions of naira had been spent on the project by successive administrations, there was nothing to show that the project had even commenced. The House members who grilled some directors of the ministry, stressed that henceforth all documents on the agreements with the Chinese firms and bank must be made public.

“How much money was appropriated and how much money was released out of the appropriation until the government of Buhari. We understand now that we only just acquired the land. Somebody, somewhere must have been pocketing the money.

“From what you told us, that is the idea I have. The minister must let us have an audited report on the matter. Let us know how many years this project has been in the books, how much money was appropriated and what was done with the money” he said.
“But speaking on behalf of the minister, Faruk Yabo, Director Renewable Energy and Rural Power Access, who is also the Chairman, Project Delivery Committee of the Mambilla project, explained that until last few months ago, nobody could say for sure that the project was taking off.

“Two committees have been set up. We have been inaugurated and we have visited the site after about 10 hours of long journey, including going on bikes.
“That is to tell you that as we speak there is no even access road to the site. So, the road ends about 20 kilometres to the place. But since the inauguration of this committee, we have met with the Taraba state governor, the contractors and consultants and other experts. Within the next two months we will come out with an optimised design,” he assured at the time.

Slow Progress

Months later, Minister of Power, Sale Mamman, said that the federal government had finished the feasibility studies, the land and area survey and was waiting for contractors to mobilise to site.

Added to that, the federal government said it had commenced the payment of compensation to host communities in Taraba state, where the take-off of the long-awaited project is located.

During a visit to the communities, he said that part of reasons for the meeting was to disseminate the desired information and galvanise their support as the federal government moves to the project implementation stage.

According to him, the next step would encompass the survey and enumeration for compensation after the constitution of the Inter-Ministerial Steering Committee (IMSC) and the Project Delivery Committee (PDC) on the project by President Muhammadu Buhari, in January this year.

He said that the signing of the Memorandum of Understanding (MoU) with the Taraba state government, before now, was to enhance project coordination and to facilitate acquiring land titles for the project sites.

Mamman added that the land and aerial surveys of the project site, development of a comprehensive project implementation manual (PIM), a comprehensive local content promotion strategy and gathering of 50-year hydrological data of the Mambilla Plateau, had also been carried out.

The minister also stated that the government had identified new ways of resolving the lingering arbitration on the project and reviewing of the project to ensure its bankability as required by the lenders to ensure that the project will offer the cheapest electricity tariffs to the market.

He added that the federal government had begun the training of at least 500 individuals under the Youths Empowerment and Skills Acquisition Training (YESAT) as part of the Mambilla Hydroelectric Power Project (MHEPP) local content initiative.
Legal Challenge

Just when everyone thought the project was gradually taking off, Sunrise has again resurrected, flaunting documents that it says entitles it to some form of compensation for alleged breach of contract.

Accusing the government of defaulting on a $200 million settlement agreement it entered with the company, Sunrise contended that the deal was supposed to make it relinquish all claims to the $5.8 billion project, which has now been revised.

The parties also appeared to have agreed that if the federal government failed to meet its payment obligations contained in the terms of payment, Sunrise will be entitled to a financial default sanction in the sum of $200 million in addition, to the unpaid principal sum of $200 million.

Sunrise’s Fronts

Mamman, however, stated that the federal government revoked the $2.3 billion Mambilla hydropower project contract with Sunrise because the government found out that the company was ‘fronting’ for a foreign business organisation.

In June, the company filed 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.

Sunrise Power had earlier on October 10, 2017, dragged Nigeria to arbitration at the court seeking a $2.354 billion award in relation to the deal before both parties agreed on an out-of-court agreement on the 3,050MW plant in Mambilla, Taraba state, on a “build, operate and transfer” basis.

Special Adviser, Media and Communication to the minister, Aaron Artimas, in a note,explained that although the federal government was interested in amicable settlement of the matter, it was clear that Sunrise was never ready or competent for the job.

“As background information, the Mambilla Power project was previously awarded to a local contractor, Sunrise Power Transmission and Procurement Company in 2003 at a cost of $2.3 billion. But as it turned out, the company was merely fronting for a foreign company.

“Under President Muhammadu Buhari, the ministry of power, during Babatunde Fashola’s tenure, decided to deal directly with Sinohydro, the Chinese Company engaged by Sunrise. Sunrise then took the federal government to the International Chamber of Commerce Court of Arbitration in France, since the project would be financed by the China Eximbank,” the minister said.

However, he noted that last year, Sunrise accepted a settlement of $200 million as settlement agreement, which he admitted that the federal government is trying to pay, so as to free the project from any encumbrances.

He said that while the ministry of power has gone very far in collaborating with the Taraba state government to secure the project site, Buhari has also directed the Nigerian Sovereign Investment Agency (NSIA) to re-evaluate the scope of the project, so as to make it less cumbersome and bankable in order to facilitate easy foreign financing.

He disclosed that the dam will be scaled down to N1,500MW instead of its previous status of 3.050MW to reduce the cost and period of execution.
Artimas stated that Mamman remains the only minister to successfully move the Mambilla Power Project from the drawing board, noting that before now, no government or minister had taken the first step of acquiring the land, let alone commit the host communities and the state government towards starting the project.

Ministry’s Doublespeak

About mid last week, reports emerged that the ministry of power, through the Special Adviser, Media, to the minister of power, Aaron Artimas, had confirmed that the president directed that the Nigeria Sovereign Investment Authority (NSIA) should sort out the $200 million out-of-court settlement so that the project could process in earnest.

But not long after did rebuttals start coming in that no directive like that had been given to the NSIA by the president.

Artimas admitted that arbitration had been reached between the federal government and Sunrise, which has not been repudiated, adding that the government has always maintained its commitment in this respect except that the Covid-19 pandemic had thrown up some challenges in the implementation.

“The NSIA review may include the government’s other commitments towards the execution of the project. There is nothing new. As soon as NSIA completes its assignment, the way forward will be further unveiled,” he said.

Close to 50 years after the idea was first mooted, it’s unclear if the Mambilla hydropower project, one of the most transformational projects around when completed, would ever see the light of day.


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