Hope for Mambilla project as Sunrise Power waives $ 500 million penalty for Nigeria
Sunrise Power Transmission Company of Nigeria Ltd (SPTCL) has agreed to waive the $ 500 million penalty charges incurred by the federal government for several breaches of a $ 200 million settlement agreement on the Mambilla hydroelectric project in the State of Taraba.
There was a legal battle that stalled the execution of the $ 5.8 billion project.
Sunrise Power had, on October 10, 2017, dragged Nigeria to the ICC International Court of Arbitration, Paris, France, looking for $ 2.354 billion award for “breach of contract” relating to a 2003 agreement to construct the 3,050 MW plant in Mambilla, Taraba state, on a “build, operate and transfer” basis.
The company has also joined Sinohydro Corporation Limited, the Chinese company currently managing the project, in arbitration.
To solve the problem, the the federal government has accepted to pay Sunrise Power $ 200 million “within 14 days” of the execution of the terms of the agreement on January 21, 2020, and also to pay a 10% penalty for non-compliance with the agreement. settlement – in addition to restoring Sunrise as a local content partner for the $ 5.8 billion project.
However, the federal government reportedly reached an out-of-court settlement during arbitration proceedings before the arbitral tribunal over its failure to pay a fine of more than half a billion dollars.
In an interview with Arise TV, Abubakar Malami, Attorney General of the Federation (AGF), said Nigeria could have lost around $ 1 billion in the case without the “patriotic act” of Leno Adesanya, managing director of Sunrise Power, to suspend the arbitration proceedings in France.
Speaking on this, Kayode Ajulo, Fellow of the Chartered Institute of Arbitrators, UK, called Sunrise Power’s decision the best because it means the end of all obstacles related to the Mambilla project.
âUnderstanding how arbitration works would give an overview of this existing rule. Since the funder, the Chinese Exim Bank, and the contractor Syno Hydro Company are really pushing for the settlement agreement, as failure to do so will not allow them to go further in the contract , it is imperative that the government honor its negotiation out of the current arbitration in Paris with MM. Sunrise Company, as a consent arbitration award to end the case so the parties can move forward, âAjulo said.
âThe claim and all other incidental expenses and / or interest from the date the settlement agreement was signed to date is the best negotiation the government has ever done.
âThere should be an end to the litigation, the parties must resolve the issue and get down to work from which the Nigerian government and people will primarily benefit. “
The 3,050 megawatt facility, the country’s largest plant and Africa’s second largest hydropower plant when completed, was designed in the 1970s but suffered serious delays.