Sunrise Power Transmission Company of Nigeria Ltd (SPTCL), a promoter of the 3,050 megawatts (MW) Mambilla hydroelectric power project, has filed a $400 million compensation claim against the Federal Government of Nigeria (FGN) for failing a settlement term.
According to documents on the process, the company filed the lawsuit at the International Chamber of Commerce (ICC) International Court of Arbitration in Paris, France.
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Sunrise said the government failed to honour a $200m compensation obligation since 2020 jointly agreed and should have been resolved in six months at most.
The company’s legal representative, Femi Falana, then filed a lawsuit at ICA on May 11, demanding $400m as overall claims including penalties.
How it all began
Sunrise had claimed it was the firm promoting the Mambilla project in Taraba state for the FGN based on a 2003 agreement.
However, immediate former Minister of Power, Works and Housing, Babatunde Fashola, in 2017, described the company as a middleman.
The minister has said the President Muhammadu Buhari’s administration was directly contracting the Engineering, Procurement and Construction (EPC) contractor, which is the Sinohydro Corporation Limited, a Chinese firm currently handling the project.
On this backdrop, Sunrise on October 10, 2017 instituted the lawsuit, seeking a $2.354 billion award for “breach of contract” on the project.
Daily Trust reports that after several negotiations, the current Minister of Power, Engr. Sale Mamman, in 2020, disclosed that the parties had reached an out-of-court settlement of $200 million.
According to Sunrise in its claim document, the amount was to be paid ‘within 14 days’ of the execution of the terms of the agreement on January 21, 2020, along with a 10 percent penalty if there is a default in the settlement terms.
The pact was signed by the Attorney-General of the Federation (AGF), Abubakar Malami and the power minister, Engr. Mamman for the FGN and Chairman/CEO of the company, Leno Adesanya.
The company also said it was agreed in the pact signed that it will be restored as the local partner for the current $5.8bn Mambilla power project.
A follow-up on this shows that the pact was revised and the local partner condition was removed. Shortly after, the FGN had further requested a review of the negotiation citing the COVID-19 pandemic effects on the Nigerian economy.
The protracted lawsuit has implications for the funding of the Mambilla project, reckoned to be a game-changer in the power supply improvement for Nigeria. It could stall the project’s financial closure process between the Federal Ministry of Finance, Budget and National Planning and the China Export Import Bank. China EXIM is billed to provide 85% funding while Nigeria delivers 15% of the $5.8bn fund.
The minister in a recent update, said the project has been restructured to be delivered in phases just as he said the aerial and land survey of the project site has been completed.
But Chinese officials last year said the country will not support any white elephant project marred with litigation.
COVID-19 stalled compensation – Power Minister
When Daily Trust contacted the minister for a reaction on the development, his Special Adviser on media, Mr Aaron Artimas, said the minister restated that there is no need for any litigation since arbitration had been reached and there was no reversal of the agreement. “The President had endorsed the decision and committed to the settlement, the process was only stalled by the COVID-19 pandemic challenges. This remains the position.
“The government’s position should be appreciated since it took this bold decision to accept arbitration on contractual agreements undertaken by previous administrations in line with the principles of continuity,” Mr Artimas explained.