What is stalling Mambilla Power project

A few weeks ago, it emerged that the Chinese government had in September told the FG that it would not provide funds for the Mambilla Power project until Nigeria settles a $5.8 billion legal dispute. In 2006, the Gezhouba Group Corporation of China (CGGCC) and the China Geo-Engineering Group Corporation (CGGC) won the bid for a joint venture to execute the hydro-power project, potentially the single biggest power plant in Nigeria. But in a separate deal three years earlier, Nigeria had awarded a build, operate and transfer contract of the project to Sunrise Power and Transmission Company, a local content partner.

In November 2017, the ministry signed another engineering, procurement and construction contract with Sinohhydro Corporation of China, CGGCC and CGGC to form a joint venture for the execution of the project — excluding SPTCL. As a result, SPTCL sued the FG and its Chinese partners at the International Chamber of Commerce in Paris for breach of contract. Leno Adesanya, SPTCL’s CEO claimed the company had spent millions of dollars with financial and legal consultants to raise almost $6 billion for the project’s execution but the company has been bogged down “through improper administrative interruptions and interventions”. Looking at their options, the Chinese appear to have backed down from Mambilla, at least until this matter is resolved.

It is important to note that the day after this report came out, the following ministers – Power, Power (State) and Water Resources – visited the Chinese ambassador, Zhou Pingjian, who, somewhat undiplomatically, said that his government would not push the Exim Bank to expedite the funding of the Mambilla power plant despite the three ministers’ request and the fact that Mambilla represents one of President Muhammadu Buhari’s legacy projects.

Agreeing with Cheta Nwanze, successive Nigerian governments have failed to grasp the concept that agreements cannot be tossed aside willy-nilly and continue to act as though contracts of previous administrations are not meant to be honoured. In fact, many new governments routinely cancel existing contracts to pander to their political base. It is an extremely destabilising practice and as this case has shown, can derail important projects.