Mambila Power: FG Fails To Pay $100m, Contractor Spits Fire

By Fola James

The federal government is trapped in multi-billion dollar litigation with Sunrise Power Transmission Company of Nigeria Ltd (SPTCL) over the Mambila power project except it makes a settlement of $100 million to the company before 1 pm tomorrow, April 24, the company’s lawyer has warned.

According to The Cable, the sum is part of the $200 million settlement agreed by the two parties over breach of contract by the Nigerian government for the construction of the 3,050MW power plant in Mambilla, Taraba state, on a “build, operate and transfer” basis in 2003.

SPTCL had sued Nigeria to the International Chamber of Commerce (ICC) court in Paris, France, demanding $2.354 billion as a penalty for contract breach, but the representatives of the federal government later pleaded to settle the matter amicably.

In an agreement reached with Nigerian lawyers, led by the Minister of Justice and Attorney General of the federation, Abubakar Malami in 2017, the Buhari administration agreed to a $200 million settlement for awarding the contract to another company Sunrise Sinohydro Corporation Limited, a Chinese firm.

The federal government is expected to make the first tranche of $100 million by tomorrow, April 24 and the remaining half by August 23.

But few weeks ago when Malami met President Buhari on the matter, through a memo dated March 26, the minister was told that the federal government had no funds to pay the settlement at this time.

President Buhari was said to have cited the sliding crude oil prices in the international oil market as his reason.

The company’s lawyers have now written a scathing letter to the federal government, spoiling for war if the terms of the settlement are met. 

Jérémie Chouraqui, the legal counsel to Sunrise, in a letter to the federal government on Wednesday, warned that there will be grave consequences if  the terms of the agreement were not met.

The lawyer also reminded the federal government of an addendum in the agreement specifying a penalty in case of any defaults in paying the agreed $200 million as scheduled.

The original agreement stipulated that if Nigeria defaulted, there would be a penalty of 10 percent in addition to the restoration of Sunrise as the local partner in the $5.8 billion hydroelectric project.

Chouraqui, reminded the lawyers that the agreement signed on January 21, 2020 provided for the payment of $200 million on or before February 4, 2020 against the withdrawal of Sunrise’s claims in the arbitration.

He stated following the failure of Nigeria to make the said payment, the two parties entered into an addendum to the transaction which moved the payment schedule to April and August 2020.

No part of the agreement has been fulfilled by the federal government, the company said.

The letter reads “In line with the provisions of the Transaction, we request your agreement to file a joint letter to the Arbitral Tribunal requesting it to issue a consent award in line with the terms of the Transaction and the Addendum.

Once issued and only when issued, this consent award would supersede the Transaction and the Addendum and end SUNRISE’s current US$2.35 billion claim against FGN and SINOHYDRO.”

The company will go back to court to enforce the agreement, the lawyer warned.

He said “Should your client refuse to issue such joint request for a consent award and/or fail to make the payments it is obliged to make under the Transaction and the Addendum, SUNRISE will resort to all available means to obtain satisfaction, including but not limited to the prompt enforcement of the Transaction and the Addendum against FGN and the pursuit of the Arbitration against Sinohydro and FGN, until full enforcement of FGN’s obligations.

In views of the current deadlines, we would request an answer on or before 1pm (CET) on Friday 24th of April 2020. In the absence of response, we will consider that your client refuses to make a joint request for a consent-award and will draw all consequences and SUNRISE will pursue any or all of its other options. SUNRISE fully reserves all of its rights.”