- The Federal Government has directed the Nigerian Sovereign Investment Authority to source $200m for settlement of International Court of Arbitration in Paris award in favour of the Chinese firm, Sunrise Power and Transmission Company Limited.
The Federal Government has directed the Nigerian Sovereign Investment Authority to source $200m for settlement of International Court of Arbitration in Paris award in favour of the Chinese firm, Sunrise Power and Transmission Company Limited.
Officials of the Federal Ministry of Power said the government had agreed to pay the sum and had mandated NSIA to work out measures for settling the debt.
The $200m settlement offer was to compensate Sunrise Power for the unlawful termination of the contract for the 1,525 megawatts Mambilla hydropower project and the re-award of the same to another Chinese firm.
Based on terms the settlement, Sunrise is expected relinquish all claims to the project once the requirements contained in the agreement with the Federal Government were settled.
Officials of the power ministry also stated that the new contractors for the project were on ground, holding on till when the ongoing survey of the site and compensation of land owners were completed in Taraba, where the about $4bn plant would be constructed.
The original contract for the Mabilla project was for the plant to generate 3,050MW of electricity, but this was reviewed downwards to 1,525MW and the cost cut down by $1bn to $4bn.
The Special Assistant to the Minister of Power on Media, Aaron Artimas, explained that the Nigeria Sovereign Investment Authority had been ordered by the President, Major General Muhammadu Buhari (retd.), to take up the matter.
He said the government through the NSIA and other channels was working on how to settle the debt, stressing that it was incorrect to allege that there was no plan to honour the agreement.
Artimas, however, admitted that the payment had been delayed, stressing that this was due to some challenges, which were currently being addressed.
He said, “The only issue now is the delay in payment, but the government has committed to the agreement. However, the government is explaining that the challenge of COVID-19 affected its finances.
“But despite that, the NSIA was given a mandate on this by the President, because the government has to find money somewhere, as this was not budgeted for. So the government will pay.”
The power minister’s aide also stated that the international court had not come up with any fresh issue for the Federal Government.
He said, “The international court of arbitration or commerce in Paris that did the arbitration did not say parties should come back for any fresh or new issue because the government has accepted and signed documents following that agreement.
“There is a signed agreement between the government and the firm. The document was signed by the Minister of Power and confirmed by the President. It is a standing agreement that Nigeria will pay the $200m.”
Artimas said, “The project has been reviewed from 3,050MW to 1,525MW in order for it to be more bankable. Once this is fully determined, the China Exim Bank that is to finance the project will come with the funding.
“The bank is funding 85 per cent of the project while the Federal Government is handling 15 per cent.
“If it was not because of the challenge of COVID-19, the President was committed to asking the NSIA (Nigeria Sovereign Investment Authority) to release funds so that contractors can mobilise to site.”
He added, “The contractors are Messrs Synohydro Corporation of China, who are the ones handling the Zungeru Power station. So they are already in Nigeria. Therefore, there should not be any challenge.”
The Head of Communications, NSIA, Titilayo Olubiyi, told our correspondent that the Mambilla power project was captured under the Presidential Infrastructure Development Fund.
He noted that although the details on how the funding of the project would be done were not available yet, work was already ongoing by the PIDF team on financing the power plant.
Olubiyi said, “I will tell you what I know for now, but will have to refer to the PIDF team to get more information because it is an ongoing project. Mambilla is part of the PIDF projects and there are five projects under the fund.
“The Second Niger Bridge is one, Lagos-Ibadan Expressway is another, Abuja-Kano Expressway is there too. Initially, the East-West Road used to be part of that fund, before the request from the Ministry of Niger Delta Affairs that it be transferred back to them.
“So there is ongoing work to address issues around financing, restructuring, etc, as it relates to Mambilla. In terms of the details as to the nature of the funding, I may have to come back to you on that.”
The NSIA official stated that the Federal Government was still interested in getting the Mambilla project running, but insisted that all necessary issues had to be cleared for a smooth delivery.
