There are indications that the $5.8 billion Mambilla hydroelectric project may resume soon as Sunrise Power Transmission Company of Nigeria Ltd (SPTCL) has agreed to waive the $500 million penalty fee incurred by the federal government.
The $500 million was incurred due to multiple defaults of a $200 million settlement agreement on the Mambilla project by the federal government.
The biggest power project in the country was stalled since 2017 by legal tussle.
Minister of Power, Engr. Abubakar D. Aliyu, disclosed recently that discussions are being intensified with all parties to resolve all encumbrances preventing the full take-off of the Mabilla project.
On October 10, 2017, Sunrise Power had dragged Nigeria to the International Court of Arbitration, Paris, France, seeking a $2.354 billion award for “breach of contract” in relation to a 2003 agreement to construct the 3,050MW plant in Mambilla, Taraba state, on a “build, operate and transfer” basis.
The firm also joined the Chinese company currently handling the project, Sinohydro Corporation Limited, in the arbitration.
The federal government had agreed to pay Sunrise Power $200 million “within 14 days” of the execution of the terms of the agreement on January 21, 2020, and also pay a penalty of 10 percent in case of a default in fulfilling the settlement agreement — in addition to restoring Sunrise as the local content partner for the project.
The federal government, however, was said to have entered into an out-of-court settlement in the course of arbitral proceedings at the court of arbitration following its default of over a half a billion-dollar penalty.
The Attorney-General of the Federation (AGF), Abubakar Malami, in an interview with Arise TV, said Nigeria could have lost about a billion dollars to the case but for the “patriotic act” of Leno Adesanya, chief executive officer of Sunrise Power, to discontinue the arbitral proceedings in France.
Mr Kayode Ajulo, a fellow of the Chartered Institute of Arbitrators, United Kingdom, described the decision by Sunrise Power as the best, as it signifies the end of all impediments relating to the Mambilla project.
“Understanding how arbitration operates would give insight to this extant settlement. Since the funder, Chinese Exim Bank, and the contractor Syno Hydro Company are really pushing for the settlement agreement as failure to do so will not allow them to proceed further on the contract, it is imperative for the Government to honour its negotiation out of the pending arbitration in Paris with Messrs Sunrise Company, as a consent arbitral award to end the matter in order for the parties to move forward,” Ajulo said.
“The claim and any other ancillary expenses and or interest from the date the settlement agreement was signed to date, is the best negotiation ever the government has made.
“There should be an end to litigation, parties must resolve the issue and get to work from which Nigerian government and people will benefit mainly therefrom.”
