Wednesday, August 4, 2021
business

$4bn Mambilla Plant: Why Sunrise Power drags FG to ICA in France

Many Nigerians were highly elated when the Federal Government signed a contract to construct the Taraba-based Mambilla Power Project with Sunrise Power and Transmission Company Limited on a Build, Operate and Transfer, BOT, arrangement in 2003 for some reasons.

First, the project was planned to be Nigeria’s biggest plant with 3,050 megawatts, MW.

Second, it was envisaged to significantly boost generation capacity, thus reducing energy poverty in the nation.
Third, it was also expected to enhance investment and development as well as create multiplier effects, especially jobs and infrastructure in host communities.

However, these were not to be for about 14 years, due mainly to a legal dispute between the Sunrise Power and Transmission Company Limited and the Federal Republic of Nigeria, following the award of the Civil Works component of the Mambilla Project to a consortium of Chinese companies, led by China Gezhouba Group.

But the situation has moved from bad to worse, following the collapse of the long negotiations, involving the Sunrise Power and Transmission Company Limited, Solicitors to Sunrise Power and Transmission Company Limited, Sinohydro Corporation Limited, Solicitors to Sinohydro Corporation Limited, Federal Ministry of Justice, Federal Ministry of Power, and Solicitors to the Federal Republic of Nigeria.

In other words, Sunrise Power, which alleged that the Federal Government of Nigeria failed to comply with the Terms of Settlement, has dragged it before the International Court of Arbitration, ICA, in Paris, France.

The case is handled by the Femi Falana-led legal team, demanding $400 million compensation claim against the Federal Government of Nigeria.

Journey to ICA
In its case information, dated June 2, 2021, sighted by Energy Vanguard, the ICA, stated: “All disputes arising out of or in connection with the present Terms of Settlement shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules.

“The parties agree, pursuant to Article 30(2) (b) of the Rule of Arbitration of the International Chamber of Commerce, that the Expedited Procedure Rules shall apply irrespective of the amount disputed. The seat of the arbitration shall be Paris, France and the language of the arbitration shall be English.”

It also added: “Any dispute arising from this Addendum shall be settled in accordance with the dispute resolution clause in the Settlement Agreement.”

Background
According to the Attorney-General of the Federation and Minister of Justice, the negotiations date back to 2012, when, “Settlement talks commenced with a view to terminating the case instituted by Sunrise Power, which was stalling the execution of the project. Consequently, on November 22, 2012, the Federal Ministry of Power, Sunrise Power, and Sinohydro signed a General Project Execution Agreement, GPEA, consequent upon the Terms of Settlement filed in the suit.

ALSO READ: Deep Blue Project: Taking the Fight to the Pirates

“Sometime in 2017, Sunrise Power issued a Notice of Dispute and ICC Arbitration Request against the Federal Ministry of Power for the failure to implement the GPEA. By the letter dated October 28, 2019, the Minister of Power informed the Attorney-General of the Federation of correspondence from the representatives of Sunrise Power requesting for amicable settlement of the matter.”

This was followed by some meetings in Nigeria and London, where all parties expressed commitment to the deal, thus enabling the Attorney-General of the Federation and Minister of Justice to emerge with concrete Terms of Settlement for all parties to sign.

Terms of Settlement
The Terms of Settlement sighted by Energy Vanguard, stated: “On October 10, 2017, Sunrise Power and Transmission Company Limited submitted a Notice of Dispute against the Federal Republic of Nigeria and Sinohydro Corporation Limited before the International Court of Arbitration in Paris over breach of obligations under the General Project Execution Agreement (GPEA) dated 23th November 2012 as executed by the parties.

“Under the above Request for Arbitration, Sunrise Power and Transmission Company Limited claimed damages amounting to not less than US$960,000.00 as a consequence of Respondents’ breach of the GPEA.

“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 these Terms of this Settlement, pay Sunrise Power and Transmission Company Limited the sum of US$200,000,000.00 in full and final settlement of the claims in this arbitration.

“Sunrise Power and Transmission Company Limited shall take immediate steps to provide a Deed of Acceptance of the above sum and also provide Deed of Undertaking to withdraw all its legal and equitable interests in the Mambilla Hydro-Electric Power Project and shall drop all its claims against the Federal Republic of Nigeria and all other parties associated with the Project.

“The terms of settlement thereof shall be entered as the Final Consent Award of this Honourable tribunal in these arbitration proceedings.”

Acceptance
These Terms of the Settlement were accepted by stakeholders. For instance, in its letter to the Presidency, dated August 19, 2020, sighted by Energy Vanguard, the Minister of Power, Sale Mamman, stated: “The Ministry of Power is in total support of the position provided by HAGF, who has been the lead in finding an amicable out of court settlement to the dispute.

“The ultimate aim of the Ministry is to see that Mambilla project implementation can proceed unencumbered; therefore whichever settlement option that can lead to a peaceful resolution for the project to commence will be acceptable.”

Back-pedalling
In a telephone interview with Energy Vanguard, Special Adviser on Media and Communications to the Minister of Power, Mr. Aaron Artimas, said: “It is not true that the government has reneged.

“The delay was caused by the outbreak of the Coronavirus pandemic. Already, the Terms of Settlement were signed by the government and endorsed by the President.”

Nevertheless, the postulations of many observers are, if the Terms of Settlement were drawn by the Federal Government of Nigeria through the Attorney General of the Federation, reviewed and accepted by all parties, why did the government not strive to comply on record time, and how would the prolonged delay impact on the project, the sector, and nation’s economy?

Consequences
However, a Lagos-based lawyer, who pleaded anonymity, said: “From all indications, this case is important in a number of ways.

“First, if it is finally proven at the ICA, it would project the government in a bad light, not willing to respect legally binding decisions.

“Second, the expected early execution of the Mambilla Power Project, with many multiplier effects, including employment, capacity building, and Local content would be delayed.

“Third, also the envisaged increase in power generation and attendant impact on the sector and nation’s economy would remain a dream. Moreover, it also raises questions on the Ease of Doing Business, EDB, in Nigeria.”

Leave a Reply

GIPHY App Key not set. Please check settings

467 Comments