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Another $2.3bn arbitration claim

Washington Gov. appoints Nigerian as Judge
Washington Gov. appoints Nigerian as Judge

A suit instituted at a court in France by Sunrise Power and Transmission Company Limited (SPTCL) against the Federal Government, claiming $2.3 billion [N828 billion] comes as another embarrassment to the country. This ugly case has been powered by gross negligence and shameful complacency by civil servants in the Ministries of Power and Justice in respect of the $5.8 billion Mambilla Power project.

This case is similar to the one instituted by Process and Industrial Development Limited [P&ID] in a British Arbitration court over a stalled power generating project in Cross River State for which a huge claim of $9.6 billion is hanging like the Sword of Damocles over Nigeria.  In the case of SPTCL, the company is alleging that it had been sidelined in the award of Mambilla Hydro Power Plant project to a consortium of Chinese firms – Sinohydro Corporation of China, China Ghexouba Group Corporation of China and China Geo-Engineering Group Corporation. The argument advanced by SPTCL is that there was a deal in which it was supposed to be a local content partner in the project, but that it has been sidelined.

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The company hinged its argument on an allegation that government had in 2003 awarded to it the contract to Build, Operate and Transfer (BOT) the plant which is envisaged to generate 3,050 megawatts of electricity for the national grid. This contract, they claimed, was kept alive under the current agreement with Chinese firms, on the condition that SPTCL would be a local content service provider. It claimed this deal was affirmed in a 2017 letter purportedly written by the Attorney General of the Federation and Minister of Justice, Abubakar Malami, to Vice President Yemi Osinbajo.

In this foggy deal, the AGF backtracked on the ‘contract,’ claiming that his opinion to the Vice President was based on inadequate information. It is this messy back and forth that has given the company the bullets to fire at the federal government and make a multi-billion naira ‘breach of contract’ claim. Now, the company has outlined multimillion expenditure it said it incurred and has dragged government and the Chinese companies involved in Mambilla project to the International Chamber of Commerce (ICC) in Paris, France.

Some of the allegations raised about this issue may not hold water, but the fact that the Ministries of Justice and Power failed to, since 2003, give a definite stand on the status of the contractual relationship between government and SPTCL smirks of lack of seriousness and unpardonable complacency on the part of civil servants who have handled this matter. This contractual agreement has been lingering for 16 years, giving false hope to the company that it would be accommodated in the Mambilla Project contract when, in the deal signed with a consortium of Chinese companies, no provision was made for SPTCL to be a local contract partner.

The two ministries must take steps to quench this fire that their negligence has started, else it could snowball into a costly case. Costly not only in terms of compensation that government would be required to pay to SPTCL, but with regard to its effect on the Mambilla Hydro Power Project. The signing of the deal between government and Chinese companies in 2017 raised hopes among Nigerians that the country was inching towards a better era of electricity generation and distribution. If this case is not handled with discretion and China Exim Bank, which is providing 85 per cent of the joint funding, changes its mind, it will be difficult for Nigeria to raise such a huge loan from another institution. Such a situation would amount to a monumental disaster, if it occurs.

It is possible similar breach of contract cases are hiding in files in government ministries. They have to be fished out and treated with dispatch to prevent the kind of embarrassment that the P&ID and SPTCL cases have brought upon Nigeria.

 

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