The federal government has agreed to pay N71 billion ($200 million) to Sunrise Power and Transmission Company Limited (SPTCL) as final settlement of the dispute over the Mambilla power project in Taraba state, TheCable can report.
The government also agreed to 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 hydroelectric project.
The new settlement deal was put together by Sale Mamman, minster of power, and Abubakar Malami, the attorney-general of the federation.
Sources told TheCable that Sunrise Power had previously asked for an $80 million settlement in order to withdraw its arbitration claim against Nigeria in France over an alleged breach of contract.
But Babatunde Fashola, who was minister of power, had contended that there was no breach of contract as Sunrise had not done any work to warrant any demand or arbitration.
Fashola also questioned the integrity of the contract.
However, with his exit from the ministry, TheCable learnt, a deal was put together by Mamman and Malami and facilitated by a female figure in Aso Rock.
The project, the biggest plant in the country, was conceived in the 1970s but has suffered severe delays.
The 3,050-megawatt facility will be the second largest hydropower plant in Africa when completed.
In 2017, Sunrise Power, who claimed to have been awarded the build, operate and transfer (BOT) contract in 2003, had dragged the federal government and its Chinese partners before the International Chamber of Commerce (ICC) in Paris, France, over alleged breach of contract.
DETAILS OF THE $200M SETTLEMENT
In documents seen by TheCable, Malami and Mamman, the minister of power, signed on behalf of the federal government while Leno Adesanya signed as chairman and CEO of Sunrise.
“Under the above request for arbitration, Sunrise Power and Transmission Company Limited claimed damages amounting to not less than US$960,000,000 as a consequence of a respondents breach of the GPEA,” the document read.
“Desirous of removing all legal impediments to the execution of the Mambilla Hydro-Electric power project, the Federal Republic of Nigeria and Sunrise Power and Transmission Company Limited have mutually agreed to settle the dispute in this arbitration amicably.
“The Federal Republic of Nigeria shall, within a period of 14-days from the date of this Terms of Settlement, pay Sunrise Power and Transmission Company Limited the net (net of any deductions, charges or taxes howsoever called) sum of US$200,000,000.00 (two hundred million US dollars)in full and final settlement of the claims in this arbitration.
“Should the Federal Republic of Nigeria fail to make such payment within the said 14-days period, the sum will immediately bear compounded interests at the yearly rates of 10% (ten percent), and in addition, the FRN shall automatically reinstate Sunrise Power and Transmission Company Limited as the executive local content partner to the Mambilla Hydropower project.
“Sunrise Power and Transmission Company Limited shall take immediate steps to provide a Deed of Acceptance of the above sum and a Deed of Undertaking stating that upon, and only upon, the receipt by Sunrise Power and Transmission Limited of the net sum of US$200,000,000.00 (two hundred million United States dollars) in full and in immediately-available funds on its designated bank account, Sunrise Power and Transmission Limited shall withdraw all of its claims against the Federal Republic of Nigeria and Sinohydro and more generally all and any claims of each Party to the arbitration against each other Party thereto shall stand irrevocably released, discharged and terminated. Each Party shall thereupon formally withdraw and drop any and all of its claims against every other Party to the arbitration.”
SUNRISE WITHDRAWS SUIT FROM ICC?
Speaking at a sensitisation meeting on the project in February, Farouk Yabo, chairman of the project delivery committee, said the local company had withdrawn the suit from ICC.
“The person that took the federal government to the International Court of Arbitration has already withdrawn the case last week,” he said.
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”.
GOING BACK AND FORTH
Adesanya, in a letter dated March 31, 2017 to Fashola, then minister of power, had accused the minister of reneging on his promise to support the project.
Fashola had maintained that available evidence did not support Adesanya’s claims, adding that he was making a desperate attempt to destabilise the project from coming to fruition.
In another letter dated June 20, 2017 to the then Acting President Yemi Osinbajo requesting his intervention in the matter, Adesanya accused Abba Kyari, chief of staff to President Muhammadu Buhari, of taking the unilateral decision of directing the ministry of power to sideline the company from the contract “against the advice of Malami”.
In the letter dated July 24, 2017 to Osinbajo, with a copy to the chief of staff, Malami had said SPTCL should be engaged as a local content partner to the project “as a means of accommodating its prior contractual interests on the project”.
However, Malami backtracked a few weeks later.
In another letter dated August 17, 2017 to the company, the AGF said he issued the previous opinion on the project based on the limited materials provided at the time.
He added that there was no requisite federal executive council (FEC) approval for the project.
“The logical conclusion in the circumstances should be that there was no valid contract between Federal Government of Nigeria and SPTC in respect of the project or at all,” Malami wrote.
CHINA INSISTED ON RESOLUTION
The China Exim Bank, which is expected to provide 85 percent 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 funds.
The Chinese ambassador to Nigeria said his country will not support white elephant projects.
“On 5th September, 2019, Yang Jiechi, Special Representative of President Xi Jinping informed the Nigerian President and Commander in Chief, President Muhammadu Buhari that unless the legal dispute is resolved, conforming out of court settlement funding for the loan will not be accessed,” He Yongjun, project manager for the Chinese partners, said,
“A meeting shall be organized by the Ministry of Power for negotiation between the relevant authorities of the Nigeria government, SUNRISE, and the members of the EPC Contractor JV to resolve the legal disputes through amicable negotiations so as to let the plaintiff withdraw the lawsuit.”
During a sensitisation meeting in February, the minister of power said that the power project is a reality.
“With this meeting and the joint sensitization trip involving the Fed Min of Power, the Taraba State Government, Mambilla Surveying team and other key stakeholders set to visit the site next week, I can assure Nigerians that the Project is a reality,” Mamman said.