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Mambilla: Sunrise Power files fresh $400m compensation claim against Nigeria

Sunrise Power had, on October 10, 2017, dragged Nigeria to arbitration at the court seeking a $2.354 billion award for “breach of contract”.

Sunrise Power Transmission Company of Nigeria Ltd (SPTCL) has filed a fresh $400 million lawsuit at the ICC International Court of Arbitration, Paris, France, against the Federal Government of Nigeria (FGN).

The court operates under the auspices of the International Chamber of Commerce (ICC).

Sunrise Power had, on October 10, 2017, dragged Nigeria to arbitration at the court 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 company also joined Sinohydro Corporation Limited, the Chinese company currently handling the project, in the arbitration.

To resolve the issue, the federal government 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 per cent in case of a default in fulfilling the settlement agreement — in addition to restoring Sunrise as the local content partner for the $5.8 billion project.

The agreement was signed by Abubakar Malami, attorney-general of the federation and Sale Mamman, the minister of power, on behalf of the federal government while Leno Adesanya signed as chairman and CEO of Sunrise — as a precondition to withdraw its arbitration against Nigeria at ICC.

The latter two conditions were, however, removed from the revised settlement agreement presented to President Muhammadu Buhari.

A month after the agreement was signed, Buhari said the federal government did not have $200 million to pay Sunrise Power.

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Malami wrote SPTCL to review the negotiation as a result of the “global economic downturn which has resulted in the re-channelling of resources for combating the global Covid-19 pandemic, coupled with the fact that the Federal Government’s crude oil earnings have slumped from the meltdown”.

But SPTCL warned the federal government against flouting the agreement reached with the company.

THE TUSSLE BEHIND AFRICA’S SECOND-LARGEST HYDROELECTRIC PROJECT

The 3,050-megawatt facility, the biggest plant in the country and the second-largest hydropower plant in Africa when completed, was conceived in the 1970s but has suffered severe delays.

TheCable had reported how SPTCL accused some “vested interests” in government who, 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.

According to Adesanya, several letters were written to inform the presidency of the breach, yet Sunrise “was sidelined” in the project by the ministry of power.

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”.

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

The Chinese ambassador to Nigeria said his country will not support white elephant projects.

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SUNRISE POWER GOES BACK TO ICC

Owing to the failure of the federal government to fulfil its financial obligation of $200 million to Sunrise Power, Femi Falana, the company’s counsel, filed a fresh lawsuit at arbitration court on May 11, demanding $400 million.

Falana stated that the lawsuit was filed under the international court’s expedited procedure rules and should be resolved in six months.

In October, Shaibu Lau, senator representing Taraba north, said the current realities of the Mambilla hydropower plant show that the project will not see the light of the day.

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