FG to pay $2.3bn fine as Mambilla Power Project faces crisis

Harboursandport.com: Lagos --- The federal government is at risk of paying $2.3 billion fine in arbitration over an alleged breach of contract for the $5.8 billion Mambilla power project in Taraba state.

 

President Mohammadu Buhari

The project, a 3,050-megawatt hydropower facility, has stalled owing to legal and funding crises after Sunrise Power and Transmission Company Limited (SPTCL), a local content partner, was reportedly sidelined in the project by the ministry of power, works and housing.

SPTCL, that claimed to have been awarded the Build, Operate and Transfer (BOT) contract in 2003, has dragged the federal government and its Chinese partners before the International Chamber of Commerce (ICC) in Paris, France.

Minister of Power; Works and Housing,
Babatunde Raji Fashola

A United Kingdom (UK) arbitration court recently awarded nearly $9 billion against Nigeria over a breach of contract with Process and Industrial Developments Limited (P&ID), earlier given the green light to build a natural gas development refinery.

Meanwhile, the China Exim Bank, which is expected to provide 85 per cent of the joint funding with the federal government for the Mambilla project, has insisted on compliance with due process and terms of the November 2017 Engineering, Procurement and Construction (EPC) contract signed with the partners before releasing funds.

While interacting with the media, Leno Adesanya, the Chief Executive Officer of SPTCL, in a letter dated March 31, 2017 to Babatunde Fashola, Minister of Power, Works and Housing, had accused the minister of reneging on his promise to support the project.

Adesanya said between 2003 and 2009, SPTCL had spent millions of dollars with financial and legal consultants to raise about $6 billion for the execution of the project, yet the company has suffered a lot over the years through improper administrative interruptions and interventions.

“While we feel a deep sense of loss that Nigeria is still discussing this project when it should have been commissioned a long time ago, if the original plan was followed,” Adesanya said.