Report: Malami commits Nigeria to pay Sunrise Power $200m on Mambilla after rejecting cheaper option

The federal government has directed the Nigeria Sovereign Investment Authority (NSIA) to source for $200 million as compensation package for Sunrise Power Transmission Company of Nigeria Ltd (SPTCL) over the Mambilla power project dispute.

According to a report in TheCable, there was legal advice to federal government officials to restore Sunrise Power as local partners to the project, an option that would have cost the country nothing as that was part of the initial demands of the company.

This option was, however, presented to President Muhammadu Buhari in the proposals for resolution.

Nigeria has now agreed to pay $200 million as “compensation” to the company, whose track record in power projects is said to be next to nothing.

Aaron Artimas, spokesperson of Sale Mamman, minister of power, in an interview with the publication, said Buhari gave the directive to the NSIA so that work can begin on the hydroelectric power project in Mambilla, Taraba state, which has been marred by legal tussles.

“After the arbitration had been secured, it was just the payment that remained to be done. The whole issue should have been settled earlier than now, but the COVID-19 challenge affected everything. The payment was put on hold. The NSIA was asked to review the project, look at the value, make it bankable, source the money to be paid for the arbitration and perhaps, mobilise the contractors to cite, pending the release of funds from Exim bank so that the project can take off. The NSIA was directed to do all that on behalf of the government,” Artimas said.

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In an accelerated-hearing suit recently filed by Sunrise Power at the International Chamber of Commerce (ICC) International Court of Arbitration, Paris, it demanded $400 million from the Nigerian government for failing to pay the compensation.

Sunrise Power had, on October 10, 2017, dragged Nigeria to arbitration in France seeking a $2.354 billion award for “breach of contract” in relation to a 2003 agreement to construct the 3,050MW plant in Mambilla on a “build, operate and transfer” basis.

Buhari had directed Abubakar Malami, the attorney-general of the federation, and Mamman, according to the publication, to negotiate a settlement agreement so that the case could be withdrawn.

However, when the duo negotiated, they reached an agreement to pay $200 million and executed it on behalf of the federal government.

A presidential aide told the publication that the usual procedure is for the attorney-general to send a memo to the president listing the terms of settlement and seeking approval to execute it.

“In this case, Malami and Mamman signed an agreement to commit Nigeria to pay $200 million compensation and then presented a fait accompli to the president,” the official said.

In a memo to the president dated March 26, 2020, Malami asked Buhari to approve the payment of the $200 million to Sunrise Power as a “full and final settlement” to discontinue the arbitration and set the government free from all liabilities in the dispute.

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However, Buhari, in his reply dated April 20, bluntly said: “FG does not have USD 200 million to pay SPTCL”.

Malami tried to re-negotiate the terms thereafter, blaming Nigeria’s inability to honour the agreement on the global pandemic and related economic challenges.

The NSIA was set up by law in 2011 to manage a portion of “excess” revenue from sale of crude oil.

It is jointly owned by federal Government (45.83 percent), states (36.25 percent), LGAs (17.76 per cent) and Federal Capital Territory (0.16 per cent).

The authority handles three mandates — to provide stabilisation support to the federation revenue in times of economic stress (20 percent), to invest in a diversified portfolio of growth investments to provide for future generations of Nigerians (40 per cent) and to enhance the development of infrastructure (40 per cent).

It is still unclear under what mandate it would source the $200 million for Sunrise.

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