Sunrise Power Transmission Company of Nigeria Ltd (SPTCL) has accepted to let go of the $500 million fine incurred by the federal government as a result of several defaults on a $200 million settlement agreement on the Mambilla hydroelectric power project in Taraba state.
A legal battle had caused a delay in the implementation of the $5.8 billion project.
The Federal Government of Nigeria was dragged by Sunrise Power to the ICC International Court of Arbitration, Paris, France, on October 10, 2017, to seek a $2.354 billion compensation for “breach of contract” regarding a 2003 agreement for the construction of the 3,050MW plant in Mambilla, Taraba state, on a “build, operate and transfer” basis.
Sunrise Power also joined Sinohydro Corporation Limited, the Chinese company presently in charge of the project, in the arbitration.
To address the issue, the federal government accepted to make a $200 million payment “within 14 days” of the execution of the terms of the agreement on January 21, 2020, and also pay a penalty of 10 percent in the event of a default in upholding the settlement agreement — in addition to restoring Sunrise as the local content partner for the $5.8 billion project.
However, the federal government was reported to have reached an out-of-court settlement in the course of arbitral proceedings at the court of arbitration after its default of over a half a billion-dollar penalty.
The Attorney-General of the Federation {AGF}, Abubakar Malami, stated in an interview with Arise TV that Nigeria could have suffered nearly a billion-dollar loss in the case but for the “patriotic act” of Leno Adesanya, chief executive officer of Sunrise Power, to discontinue the arbitral proceedings in France.
Speaking on the matter, Kayode Ajulo, a fellow of the Chartered Institute of Arbitrators, United Kingdom, described the decision by Sunrise Power as the best, as it signifies the end of all impediments relating to the Mambilla project.
“Understanding how arbitration operates would give insight to this extant settlement. Since the funder, 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 proceed further on the contract, it is imperative for the Government to honour its negotiation out of the pending arbitration in Paris with Messrs Sunrise Company, as a consent arbitral award to end the matter in order for the parties to move forward,” Ajulo said.
“The claim and any other ancillary expenses and or interest from the date the settlement agreement was signed to date, is the best negotiation ever the government has made.
“There should be an end to litigation, parties must resolve the issue and get to work from which Nigerian government and people will benefit mainly therefrom.”
The 3,050-megawatt facility, the biggest plant in the country and the second-largest hydropower plant in Africa when completed, was conceived in the 1970s but has suffered severe delays.
