TheCable

As the country continues to battle with the $9.6 billion award in favour of P&ID, another possible $2.3 billion fine in arbitration is hanging over the country in France as a result of controversies surrounding the Mambilla power project in Taraba state. 

In August, a British commercial court had granted P&ID powers to seize Nigerian assets worth $9.6 billion over a failed gas processing deal in which the federal government was found liable for not fulfilling its own part.

The $5.8 billion Mambilla hydropower facility is being stalled over unresolved legal and funding crisis involving the Nigerian government and a local content partner, Sunrise Power and Transmission Company Limited (SPTCL).

In documents seen on Monday by TheCable, SPTCL is making the following claims for being excluded from the final contract:

• Wasted expenditures: $100 million+
• Loss of profit as content partner: $565 million
• Loss of the commission due by SINOHYDRO to SUNRISE: $855 million
• Loss of profit that would have been made through the resettlement contract: $525 million
• Loss of reputation: $25 million+

THE MAMBILLA PROJECT CRISIS

Like the P&ID controversy where Abubakar Malami, attorney-general of the federation (AGF), was alleged not to have made efforts to negotiate while the legal proceedings were ongoing, the 3,050-megawatt power project also suffered a similar fate.

Leno Adesanya, the chief executive officer of SPTCL, said the company was sidelined in the project by the ministry of power in a series of petitions to President Muhammadu Buhari, Vice-President Yemi Osibanjo, Malami, Babatunde Fashola, former minister of power.

SPTCL, which claimed to have been awarded the build, operate and transfer (BOT) contract in 2003, said some “vested interests” in government had, in 2017, signed another contract with three Chinese companies, Sinohhydro Corporation of China, China Ghezouba Group Corporation of China and China Geo-Engineering Group Corporation, to form a joint venture for the execution of the project.

The local content partner had accused Abba Kyari, chief of staff to the president, of taking the unilateral decision to remove the company from the contract. The company also accused Fashola of reneging on his promise to support the project.

As a result, SPTCL dragged the federal government and its Chinese partners before the International Chamber of Commerce (ICC) in Paris, France, over an alleged breach of contract.

Adesanya claimed the company 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”.

The China Exim Bank, which is expected to provide 85 per cent of the joint funding with the federal government for the Mambilla project, 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.

GOING BACK AND FORTH

On July 24, 2017, Malami wrote a letter to Osibanjo, the then acting president, recommending that SPTCL be accommodated as a local partner in the project.

“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,” Malami wrote.

A few weeks later on August 17, 2017, Malami backtracked, saying he issued the previous opinion on the project based on the limited materials provided at the time.

He said there was no requisite federal executive council (FEC) approval for the project.

But Malami’s claim was challenged in another letter by Gbolahan Elias, a senior advocate of Nigeria (SAN), who said there was no statute as at 2003 when the contract was awarded to SPTCL requiring the consent of the FEC before a letter of award could be validly issued.

SAVING THE POWER PROJECT FROM MORE CRISIS

In a petition written to Buhari on November 18, 2018, Adesanya asked the president to save the project, conceived in 1982, from further controversy.

“Mr. President can save the project from being enmeshed in another controversy as it occurred during the government of President Yar’Adua where a Presidential adviser allegedly took millions of dollars in bribes, and eventually led to the removal of the official and the termination of the $1.46b civil works contract,” the petition read.

“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.”

‘NO CONTRACT WHATSOEVER’

However, Fashola, in a statement issued in January, accused Adesanya of trying to destabilise the Mambilla project.

Hakeem Bello, Fashola’s spokesman, said: “The attention of the Hon. Minister of Power, Works and Housing, Mr Babatunde Fashola SAN has been drawn to the spurious and unfounded allegations of Leno Adesanya with regards to the ongoing Mambilla Power Project,” the statement read.

“Nothing is more further away from the truth than the claim that the loan negotiations have stalled since 2017 because of an attempt to utilize $600 Million (equivalent of N219 Billion) from the 3,050MW hydropower project for a “pet project” not hitherto considered by the Federal Executive Council.

“There is currently no budgetary provision or cash provision of $600 million or the N219 Billion in any budget of the Federal Government for the Mambila Project. Therefore you cannot attempt to divert what does not exist.

“For the avoidance of doubt, the China Exim Bank disburse money to specific projects and on conclusion of negotiations, the loan will be devoted to the construction of the Mambila Power Project, which has been on the drawing board for close to 40 years before the advent of the Buhari administration which is now working assiduously to get the project off the ground.

“The antics of Leno Adesanya and his ilk would readily explain why the project has taken so many years without lift-off. Since Mr. Adesanya has chosen to go to court, he would be required to prove his baseless allegation in court.

“The Federal Executive Council which is the highest decision making organ of the Executive Arm of Government never awarded a contract for the project to Mr Adesanya.

“The allegation with regard to stalling the Mambilla project is untrue , baseless and a figment of Adesanya’s imagination. The events and relevant facts will show that because Mr. Fashola first presented a memo on the Mambilla Power Project to the Federal Executive Council in August 2017; which was the first ever Federal Executive Council approval given to the Mambilla project in favour of a Chinese Joint venture.”