Nigeria’s largest 3050 megawatts (mw) Mambilla hydropower project came alive last month after the Federal Government and some Chinese contractors signed a N2.1 trillion ($5.792 billion) contract deal in Abuja.
The signing ceremony which was supervised by the Minister of Power, Works and Housing, Mr. Babatunde Fashola, marked a new dawn for Nigeria’s power sector as the project which has been on the drawing board for about 40 years is becoming a reality. Fashola lauded President Muhammadu Buhari for commencing the project.
The $5.79bn project is expected to be completed in six years from now, which is by 2023. The funding consists of $4.92bn from the Chinese Exim Bank and other Chinese lenders, which is 85 per cent of the contract sum, while the Federal Government will provide 15 per cent, amounting to $868.87m.
A breakdown of the contract works obtained by Daily Trust shows that the project will cover four large dams: Nya, Sumsum, Nghu and Api Weir, and two underground power houses of 12 units of 250mw each, all on the Mambilla Plateau in Taraba State.
The other project components include two units of 330-kilo volt (kv) of 700-kilometre (km) transmission lines to Makurdi in Benue State and Jalingo. There will be about 120km access roads connecting the project site and nearby communities and the resettlement of an estimated 100,000 affected persons. The three Chinese firms to handle the project are China Gezhouba Corporation, Sinohydro Corporation Ltd and CGOC Group Ltd.
Fashola, in an exclusive interview with Daily Trust in June 2017, had said he obtained a “No Objection” clearance certificate from the Bureau of Public Procurement (BPP) and was working on raising a memo to present the project at the weekly Federal Executive Council (FEC).
“The ‘No Objection’ for Mambilla just came into my office today (Monday). It is still on my desk. These are all of the bureaucratic processes of getting things done in government. This is the ‘No Objection’ for Mambilla, now we can go to FEC, get approval and award the contract,” the minister said pointing at the paper.
The FEC then approved the project on August 30, 2017; two months after the procurement terms were certified by the BPP while the contract was signed about two months after.
The project which first contract was awarded in 2007 but cancelled shortly suffered a lot of power plays, experts have said. An ex-official of the Bureau of Public Enterprises (BPE) who was privy to the project’s early years said the plant ought to have been completed in 2011, about six years ago. The effect of the delay, he said, was that Nigeria gained more dark days than light due to over investments in the thermal and gas-reliant power plants.ý
In 2016, the incessant attacks on gas pipelines deprived the power sector of enough gas for power generation as over 70 per cent of the 23 electricity generation plants are gas-based with just three hydropower plants.
The power sector expert said the Mambilla station would have been operational with the fifth hydropower plants, 700mw Zungeru in Niger State, joining this year to raise the capacity of hydropower generation to over 5,000mw.
“With the capacity from Kainji, Jebba and Shiroro hydros, we could get up to 4,000mw from Generation Companies (GenCos) alone and we would not have been in darkness now even if vandals attacked the gas pipelines,” he said.
The project’s feasibility study, first done in 1985, rated it as a 2,600mw base load hydroelectric power to be implemented over five years. It was, however, reviewed to 3,050mw in 2012 under then President Goodluck Jonathan, documents have revealed.
Lahmeyer International of Germany was engaged to undertake a detailed review of the feasibility study of the project and to prepare a bankable report and tender documents for eventual implementation, an annual report of the ministry in 2010 confirmed.
Follow ups by our reporter at the ministry indicates a breakthrough for the project in 2017. The ministry, in late 2016, said the Taraba State Governor, who is a former Minister of State for Power, Mr. Darius Dickson Ishaku, was acquiring the project’s land alongside the access road.
A key director in the ministry (Power) told our reporter that Sinohydro, which is one of the contractors, had been working with another Chinese firm, CNEEC, on the ongoing construction of the 710mw Zungeru hydropower in Niger State since May 2013.
As at 2016, the ministry official said the project’s cost was further reviewed as, “The BPP has valued the project at $5.732bn. However, on approval at FEC this year, the cost rose to $5.792bn. This was over $2bn higher than the value of $3.2bn reviewed by the then Office of the Vice President through a French consultant that expanded the project’s scope to 3050mw in 2011, after the project’s contract was cancelled.
The official said to complete the project, it would require 63 months (over five years), including 12 months for a Defect Liability Period (test running) before it was handed over by the contractors for full operation.
How FG’s raising 15% counterpart fund
Checks by Daily Trust reveal that the Federal Government had waited for the funding through proceeds from N1tn sales of 10 power plants under the National Integrated Power Projects (NIPPs) whose transaction started in 2014. The China Export Import (EXIM) Bank would then disburse the 85 per cent in tranches as the work progresses. However, with the acute delay in the NIPP sales, officials at the ministry said government was seeking for alternatives.
Analysis of the 2018 budget proposal shows that government has pegged N8.5bn as part of the 15 per cent counterpart funding for the project. This is about $23.6m from the $869m local funding..
From the N9.82bn total budget for the Mambilla project in 2018, consultancy services will take N1.3bn. The breakdown shows that N610m will go for consultancy works for the valuation and compensation of the affected communities; N200m will go to the Federal Government and Taraba State project implementation team, while another N512m will go for engineering design, management and supervision of the project.
Over N1.8bn spent on studies in 6 years
Prior to the 2017 achievement of signing the project contract for the second time since it was conceived, Daily Trust analysis of yearly budgetary allocation at the Budget Office since 2010 shows that over N1.8bn was spent on doing certain studies and consultancies for the project.
In 2010, about N934.9m was allocated to the project for the geotechnical/geodetic surveys, orthophoto mapping of the site, the Environmental Impact Assessment (EIA), land acquisition, resettlement and compensation of inhabitants. Another N69.7m was pegged to review the feasibility study and other spending.
In 2013, the project management and consultancy services got N200m. It got another N300m in 2014 for consultants to do a detailed Engineering Design and Project Management Supervision of the project. The annual report of the ministry for 2014 also indicates that the detailed engineering design was completed but another N15.1m was allocated to the same item in 2015. For 2018, the same item which was said to be completed three years ago will get N512m, budgetary figures indicate.
An annual report for 2012 shows that the Federal Government and the states will be responsible for the cost of resettlement and project management estimated at about $310m of which the Federal Government had already spent 49.5m as at December 2012.
In 2016, under President Muhammadu Buhari and Fashola, N407m was allocated to the project. However, no physical work was done in the site in 2016, but the Chinese firms only went to the proposed site to have a view of what they would be doing last year in August.
Negotiation begins with China, finance ministry
Just last week, Fashola hinted that after the contract signing, the financial negotiations had been taken over by the Minister of Finance, Kemi Adeosun, and the Chinese financiers.
Fashola, who spoke at the Power Sector Reform Programme (PSRP) media workshop, said once the negotiations were completed, he would be consulted and then government could prepare to flag it off for construction.
He also said signing the Mambilla contract showed that the present government was committed to reforming the power sector, adding that, “There are problems but there is a very clear plan.”