Mambilla power project site. File photo
THE controversial Mambilla Hydroelectric Power project resurfaced in public discourse when the Senate Committee on Local Content re-echoed the Federal Government’s recent declaration that construction would finally commence on the long-delayed infrastructure. Committee Chairman, Teslim Folarin, stated that with all legal hurdles stalling its take-off now resolved, the contractors would move personnel and equipment to the site before the end of the year. Before his recent sacking as Minister of Power, Saleh Mamman had said that the project would be completed by 2030 to add 1,525 megawatts of power to the installed generating capacity.
This project has been too long in the making, suffering twists and turns and costing the taxpayer money with no visible returns. The government should henceforth shift its strategy from contract-and-debt financing to a private investment-led model for critical infrastructure.
Mambilla is a byword for Nigeria’s failed national development aspirations. It reflects the inconsistency by successive administrations in seeing through essential national infrastructure. Here is a project that was first conceived in 1972 but 49 years later, has not taken off! Meanwhile, the country’s electricity power sector, from generation, to transmission and distribution, are grossly inadequate and chaotic.
Folarin said Mambilla would finally be concretised following the resolution of outstanding legal issues and approval of the $5.79 billion contract with a consortium of Chinese contractors. The Chinese Export-Import Bank will finance 85 per cent of the development, with the Nigerian government contributing 15 per cent. In August, the President, Major General Muhammadu Buhari (retd.), had directed the Nigerian Sovereign Investment Authority to source $200 million to pay off Sunrise Power and Transmission Company, as ordered by the Paris-based International Court of Arbitration as compensation for the termination of its earlier contract to build the plant.
Surely, it would have served the country better to attract private investment rather than the contract-and-debt format it had adopted over the last five decades. Conceived in 1972, it was incorporated into subsequent national development plans. Eventually planned as a 3,050MW hydroelectric turnkey project featuring four dams to be constructed on Dongo River at Gembu and environs in Taraba State, it would have two underground powerhouses and 12 turbine generators and generate 50,000 jobs during construction. Other benefits include reducing dependence on fossil fuel-powered energy sources, opportunities for export and contributing to irrigation farming, manufacturing, and tourism. It was also to help realise the now forlorn goal of 23,000MW installed capacity by 2023. For context, it was potentially the largest hydroelectric power plant in Africa before Ethiopia’s more recent Grand Renaissance Dam of 6,450MW.
Its trajectory reinforces the reality that commercial infrastructure in Nigeria is better left to private capital and the government sets priorities and provides a favourable operating environment. While Ethiopia’s dam is near completion, Nigeria’s is still mired in some uncertainty, and has been scaled down to 1,525MW. Moreover, it comes with debilitating debt. The same Chinese Export-Import Bank that is advancing so much credit to Nigeria is to provide 85 per cent of the funding (as a loan) while the government will provide 15 per cent ($870 million). Going by past sad experience, the targeted 2030 completion date may be missed if either party fails to meet contractual obligations. Several contracts have been awarded and ended up in scandals. Mambilla featured prominently in the notorious power sector scandal where payments were made for contracts that were never executed.
Meanwhile, the World Bank calculates that the country loses $28 billion or 2.0 per cent of its GDP annually due to power shortages. Currently, the total national installed power generating capacity is 12,522MW with just over 6,000MW output realisable; only an average of 4,000MW is supplied to Africa’s largest economy and population. Of the total, only 2,062MW is hydropower, coming mainly from Jebba, Shiroro and Kainji.
While Nigeria was convulsed with policy shifts and scandals, Egypt, through purposeful leadership and strong political will, in a mere six years to 2021 raised generating capacity by over 30,000MW to 59,003MW, jumping from 145th rank worldwide to 77th in power generation, and overtaking hitherto continental leader, South Africa, that nevertheless also raised output from 42,000MW to 58,095MW. Apart from Ethiopia’s mega-dam, Angola completed its 2,071MW Lauca hydropower station last December, according to the International Hydropower Association. Uganda, Guinea, and Morocco also completed hydropower projects.
There should no longer be any obfuscation or self-defeating statist attitude towards power. Nigeria is the country with the world’s largest access to electricity deficit despite trillions of naira and multibillion-dollar debts piled up for coming generations. Wisdom demands that competent private sector investment should take the lead in closing the deficit. The government should therefore open up the sector; fine-tune the Electricity Power Sector Reform Act to attract global private power sector giants to invest in renewable energy like hydro, solar, wind and waste.
Hydropower is predicted by the International Energy Administration to become the “dominant source of flexible electricity by 2050.” With its many rivers, the International Renewable Energy Association recommends that Nigeria invests right to become a major exporter of electricity in West and Central Africa. Angola is gaining a head start with over 3,000MW in hydropower installed. Getting the concessions right for the Gurara, Tiga, Oyan, Challawa dams will be crucial.
Faced with low revenues, debts and battling economic adversity worsened by the COVID-19 meltdown, the government cannot sustain its imprudent preference for solely funding infrastructure, and endless borrowing for power, railways, ports, steel, and airports. Fostering a private sector-led economy holds the key to unlocking productive potential, reducing unemployment and poverty. State governments should aggressively seek investment in power, tapping into the easing of the rules by the Federal Government.
There should be simultaneous investments in transmission and distribution to make Mambilla meaningful. Currently, the sole transmission grid has a wheeling capacity of less than 6,000MW, while the GenCos are dogged by debts, inefficiencies, low investment, and inadequate infrastructure.
The 2013 power asset sale debacle that saw 11 distribution and six generating companies (three of them hydro) going to incompetent emergency Nigerian investors should be avoided at costs. The sector desperately needs a massive infusion of foreign direct investment, technical and managerial expertise, and a vastly improved business operating environment. The government’s urgent task is to provide supporting public infrastructure like access roads and public transportation and facilitate effective private investment in rail infrastructure.
Having signed on to yet another contract-and-debt deal with the Chinese, the government should scrupulously meet all its contractual obligations; ensure effective supervision and monitoring of the project and strict adherence to the delivery timelines. The National Assembly should undertake effective oversight to achieve delivery of this project and end Nigeria’s power deficit agony.