14 December 2012

Nigeria: Highwire Politics Threaten U.S.$3.2 Billion Mambilla Power Project

Recent attempts by the federal government to revisit the construction of the 3,050 Mega Watt (MW) Mambilla power project which has been in the drawing board since 1981 is still shrouded in confusion.

Recently, the federal government signed a Memorandum of Understanding with a Chinese firm, Sinohydro Corporation and China National Electric Engineering Corporation (CNEEC) for the construction of the project.

However, there are allegations that government plans to convert the MoU into a binding contract for the execution of the job.

LEADERSHIP learnt that, already, there are plans for an alleged provision of N87 billion, being the 15 per cent counterpart funding of $3.2 billion base price for the project by the federal government, to Sinohydro/Sunrise consortium.

This is even as the status of Lot 1 of the Mambilla project contract initially awarded to Chinese consortium CGGC/CGC in 2007 is still beset by controversy. The consortium, CGGC/CGC, had won Lot 1 of the project, which involves engineering and metallurgical works during former President Olusegun Obasanjo's administration and had mobilised to site before the contract was later revoked by the late President Umaru Yar'Adua.

Although the current proposed contracting arrangement states that Messrs Sinohydro will cover 70 per cent of the project while the initial winners of the contract, Messrs CGGC, will cover 30 per cent of the project scope, CGGC was, however, not represented during the MoU signing.

A source told LEADERSHIP that the firm was absent from the ceremony because they disapproved of the new arrangement and rather wants the federal government to revisit the contract they had earlier won.

According to the source, "CGGC took a copy of the MoU which they obtained to the Chinese Ambassador, who, in turn, transmitted the document to the Chinese government, and from all indications, China is not happy about the development," he said.

He noted that the Chinese government may be reluctant to deliver on its pledge of counterpart funding for the project through Exim Bank of China, because of the conflicts.

The source added that if "CGGC is to go to court over this issue, they will claim lots of money from the Nigerian government. But they don't want to go that way now; they are hoping the matter will be addressed diplomatically between both governments."

However, our reporter who sought clarifications on the contentious issues was told at the ministry of power that the execution of the project was still being ratified.

Director of Power, Sanusi Garba, who said he could not comment on the legal issue surrounding the project, however, said no contract had been awarded for the project, stressing that an MoU was not a contract.

He further said that, just like the Zungeru power plant which went through the BPE and returned with no objection, the Mambilla contract award will also pass through due process.

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