Barely a year after the signing of an agreement for the construction of the $5.792billion (about (N2.096trillion) Mambilla hydro-power project in Taraba State, the contract is enmeshed in a legal crisis.
The legal hitch follows moves by some forces in government to sideline the local content partner, Sunrise Power and Transmission Company Limited.
The company was awarded the Build Operate and Transfer (BOT) contract for the project in 2003.
But the issues surrounding the project are now before the ICC Arbitration Panel in Paris.
Although an amicable resolution of the legal dispute has been proposed, it was learnt the project might be stalled unless President Muhammadu Buhari intervenes in the crisis.
The Federal executive Council (FEC) on August 30, 2017 approved the award of the project to Messrs China Gezhouba Corporation, Sinohydro Corporation Limited and CGOC Group Limited.
In November 2017, the Minister of Works, Housing and Power, Mr. Babatunde Fashola signed the contract for the 3,050megawatts hydro power project.
During a state visit to China on September 7, 2018, the President of CGCC, the construction company, Prof. Lyu Ze Xiang, told the President that “our target is to commence the project early next year.”
But while the President is looking forward to the take-off of the project, the legal dispute before the international arbitration panel is yet to be resolved.
Sensing a likely legal crisis, the Attorney-General of the Federation and Minister of Justice, Mr. Abubakar Malami, n a July 24, 2017 letter to the then Acting President, Prof. Yemi Osinbajo, recommended that the interest of the local partner, Sunrise Power and Transmission Company Limited, should be accommodated.
In a memo, the AGF said: “Sunrise Power and Transmission Company Limited should be engaged as Local Content Partner on the Mambilla Project as a means of accommodating its prior contractual interests on the project.”
But instead of complying with the advice of the AGF, some government officials had been trying to shut out the local content partner.
The power-play in government over local content partner has created a major hurdle for the Chinese consortium.
A source said: “In spite of the fact that this is a signature project for this administration, some government officials do not want the construction of the Mambilla Hydro-Power Project to take off early 2019 as contained in the timeline.
“And with the fresh legal dispute over the project before an international arbitration panel, the government may find it difficult to finance the plant. By its funding module, the project would be jointly financed by the Federal Government and the China Export Import (EXIM) Bank. While EXIM bank will provide 85 per cent of the cost, the Federal Government is to bear 15 per cent.
“Unknown to the President, there are vested interests in government trying to drag the nation into unnecessary legal web which might delay the construction of the new plant.
“Some of these power brokers wanted some of the billions of dollars meant for Mambilla Project to be diverted to a 1500MW solar power project.”
As at press time, it was gathered that the Federal Government was yet to reach an amicable resolution with Sunrise Power and Transmission Company Limited and Sinohydro Corporation states at the arbitration panel in Paris.
In a November 18, 2018 petition to President Buhari, the Chairman/CEO of Sunrise Power and Transmission Company, Mr. Leno Adesanya, exposed the intrigues behind the project and the need for a presidential intervention.
The petition to President Buhari was entitled “Re: Proposed Amicable Resolution in respect of ongoing $2.3 billion ICC Arbitration in Paris between Sunrise, Federal Government of Nigeria (the “FGN”) and Sinohydro Corporation states.”
His petition reads in part: ”As a result of numerous attempts to fraudulently divert billions of dollars from the 3050MW Mambilla hydropower project (the “Project”) to a 1500MW solar power project, the execution of the 3050MW Mambilla hydropower project has refused to take off the ground.
“The reason being, China Exim bank’s insistence of compliance with due process, and terms of the November 2017 EPC contract signed with the Chinese JV Partners.
“Ironically, this fraudulent multi-billion dollar solar power project was rejected by the Federal Executive Council (the “FEC”) on the 16th of August 2017 when it was fraudulently packaged with the Mambilla hydropower project as one project.
“The Solar Power project was submitted without any Feasibility studies, Environmental Impact Assessment (EIA) reports, NASS budget approvals, and without any bid process (due process) in the selection of the proposed EPC contractor(s) for both the 3050MW Mambilla hydropower project and the 1500MW Solar Power project.”
”Your Excellency’s commitment to expeditiously execute the Project in June 2015 was communicated by the Honourable Attorney-General of the Federation, Mr. Abubakar Malami SAN (the “HAGF”) to the Honourable Minister of Power, Works and Housing (the “HMOPWH”) Mr. Babatunde Fashola SAN on the 20th of May, 2016; when the HAGF directed the HMOWPH to comply fully with all existing agreements between the Federal Government of Nigeria (the “FGN”) and Sunrise; basically the out-of-court Settlement, and the General Project Execution Agreement(s) of November 25th 2012.
”In view of the Presidency’s invitation for CGCOC (formerly CGC) participation in the Project, we petitioned Your Excellency, HMOPWH, and HAGF in April 2017 with evidence of previous corrupt practices CGC in May 2007 when they paid millions of dollars to a very senior Presidency official to enable CGGC/CGC sign a $1.46 billion Mambilla Civil Works contract on the 28th of May, 2007, as one of the $16 billion Nigerian Integrated Power Project (the “NIPP”) power projects.
“CGC made this confession to then President Umaru Musa YarAdua GCFR in February 2008 while on a State visit to China. The senior Presidency official admitted to then President Yar’ Adua of collecting the bribe, which led to the termination of the contract, and removal of the official from the Presidency in 2008.”
Adesanaya gave insights into the latest crisis impeding the hydro-power project.
He said on the 22nd of May, 2017, a Presidency official instructed the Ministry of Power, Works and Housing(HMOPWH) to “remove Sunrise from the Mambilla hydropower project, and instructed that CGGC, CGCOC and SINOHYDRO would execute the Project”.
He added: “Bearing in mind that Your Excellency was on medical vacation in the UK, and Professor Yemi Osinbajo SAN GCON was the Acting President.
“On the 24th of July, 2017, the HAGF reacted to our petitions by advising then Acting President Prof. Yemi Osinbajo SAN GCON that the HMOPWH should sign the $5.8 billion EPC contract with Sinohydro and CGGC (50/50), with Sunrise as the Local Content Partner to the Project.
On the 10th of November, 2017, the HMOPWH signed the $5.8 billion Mambilla hydropower EPC contract with CGGC, CGCOC and SINOHYDRO.
“As a result of this illegality, we commenced arbitration proceedings against the FGN and SINOHYDRO Corporation of China at the International Chamber of Commerce (the “ICC”) in Paris.
In February 2018, Sinohydro (owned by the Chinese Government with over $3 trillion in foreign reserves) filed a request for an amicable resolution with Sunrise.”
Adesanya also tabled four suggestions before the President in order to protect the project from being stalled by legal dispute.
He said: “In the light of the recent irreversible arbitration ruling delivered against the FGN in the UK and the United States for Nigeria to pay at least $9 billion in damages to Process and Industrial Development Company in the UK (the “P&ID) for breach of contract, our lawyer, Mr. Femi Falana (SAN) held discussions with Your Excellency in July 2018 to explore avenues for an amicable resolution, and prevent another $2 billion in damages against the FGN.
“ As a result, Your Excellency expressed your full support and approval for expeditious settlement of the dispute with Sunrise, and if possible, “in line with Your Excellency’s directive to HAGF in 2016″
“In the light of the above, and the need to urgently communicate a settlement to the Paris Arbitral panel, we hereby seek Your Excellency’s approval for the following Prayers:
Compliance with the 24th July legal recommendation of HAGF to the then Acting President Prof. Yemi Osinbajo SAN GCON, with the signing of a new $5.8 billion EPC contract between SUNRISE/CGGC 50%, SUNRISE/SINOHYDRO 50%, with SUNRISE as the exclusive Local Content Partner to the Project.
Immediate release of 15% (US $870,000,000.00) Counterpart funds to China Exim bank on behalf of SUNRISE, CGGC and SINOHYDRO or
Approval for the Nigerian Sovereign Investments Authority (the “NSIA”) to immediately negotiate our Paris arbitration claims, and make payments on terms and conditions that are mutually acceptable.
A meeting with Your Excellency, and respectfully, the Vice President, HAGF, NSIA HMOPWH, ICPC, EFCC, and the Chinese JV Partners, and the Chinese Ambassador to Nigeria, to discuss the corruption and fraudulent practices delaying the execution of the project, bearing in mind the Chinese zero tolerance for corruption, and Your Excellency’s strong and against corruption.”