How FG blew bn on 49 years old Mambilla hydropower project

How FG blew $10bn on 49 years old Mambilla hydropower project

This Nigeria

Dennis Mernyi Abuja
Last week, Abuja, Nigeria’s Federal Capital Territory and its neighbouring states of Nasarawa, Niger and Kogi states were plunged into total darkness.

The only reason given was that workers of the Abuja Electricity Distribution Company (AEDC) under the Union body of National Union of Electricity Employees (NUEE) down tools because of owed salaries and other entitlements.

AEDC is electricity distribution firm that supplies the FCT and the three states of the federation (Nasarawa, Niger and Kogi). The company, it was reported had gone bankrupt. It could not even service its huge N20 billion debt to its bankers, United Bank for Africa (UBA).

As it lingered, businesses were grounded. Darkness pervaded the region.

UBA later got the government’s mandate to take over the company and run it as the highest shareholders since the firm has lost the value of its shareholding and the authority to control it any longer.

The misfortunes of Nigeria’s power sector is dated several decades ago. Many past administrations by former heads of the country’s governments at all times gave an eye to a steady Power generation, transmission and distribution.

They all failed. The sector still survives with its hydra-headed monstrous features unchanged.

Nigeria has over the decades faced the triple challenge of providing reliable power supply, reducing greenhouse gas emissions, and keeping energy affordable to its citizens without success.

The electricity supply in Nigeria has worsened over the years. Nigeria has been unable to meet the demands because of its policies, regulations and management of operations. Its failure to provide adequate and reliable energy is well documented, specifically its impact on the economy.

The country’s commercial and industrial sectors have become heavily reliant on self-generated power, using petrol and diesel generators. This accounts for nearly half of all electricity consumed.

Nigeria’s shortage of reliable power supply is a constraint on the country’s economic growth. The country needs to diversify its economy beyond oil and gas revenues because that market is volatile

From the records, Nigeria’s quest for a steady electricity supply predates the present administration. It all started during the colonial era. One of such efforts was the construction of gigantic hydropower projects that could change the situation. The efforts of building power infrastructures commenced with some on and off-grid projects that could generate electricity outside gas turbines.

The quest gave birth to the building of the 30 Power Plants in Nigeria, located in different parts of the country, all with installed generating capacity of about 13,000 MW while the Transmission Company of Nigeria (TCN) transmits near 7,000 MW.

Conceived in 1972, the Mambilla Hydropower project was originally a 3.05GW hydroelectric facility located on the Donga River near Baruf, in Kakara Village of Taraba State, Nigeria.

49 years ago, the project after series of budgetary allocations, special funds and foreign donations is yet to attain even 50 per cent construction and completion for an average hydropower project that ordinarily takes between 4 and 7 years depending on the capacity.

The project from inception is undertaken by Nigeria’s Federal Ministry of Power. Expected to commence operation in 2030, Mambilla will be Nigeria’s biggest power plant, producing approximately 4.7 billion kWh of electricity a year and estimated to cost $5.8bn and will generate up to 50,000 local jobs during the construction phase.

Although Mambilla hydroelectric project was originally conceived in 1972, it could advance only after 35 years when China’s Gezhouba Group awarded a contract to develop the project with 2,600MW installed capacity in 2007 when the ground survey was completed in August 2010 and environmental approval was received in December 2011.

The capacity of the project was increased to 3,050MW in 2012. The project was, however, put on hold due to administrative clashes, until it received government approval in 2016.

Nigerian Federal Ministry of Power Works and Housing awarded the project development contract to a consortium of three Chinese companies including the Gezhouba Group, in November 2017.

Mambilla hydroelectric facility will comprise four dams and two underground powerhouses having 12 turbine generator units in total.

The four dams to be constructed on the Dongo River for the Mambilla hydropower project include Nya (formerly known as Gembu), Sumsum, Nghu and Api Weir dams.

Nya and Sumsum will be 100m and 35m-tall roller compacted concrete (RCC) dams with a crest length of 515m and 460m, respectively.

Nghu will be a 95m-high rockfill dam with a crest length of 650m, while Api Weir will be a small regulatory dam to raise the water level of the river.

Nya and Sumsum dams will be connected through a 16km-long, 6m-diameter tunnel, whereas Sumsum and Nghu dams will be connected by a 1.5km-long and 10m-wide canal, while the headrace canal for the plant will be 3.1km-long and 15m-wide.

Each underground powerhouse of the plant will measure 175mx27mx38m and house six 250MW Pelton turbine units operating at a total dynamic head of 1,007m. The diameter of the power shafts connecting each turbine will range between 5.25m and 8.40m.

Two 6km-long tailrace tunnels for the plant will be of 8m diameter each, while the tailrace canal will be 3km-long and 25m-wide.

Chinese Export-Import (Exim) Bank is funding 85% of the estimated $5.8bn project cost, while the remaining 15% funding will come from the Federal Government of Nigeria.

The power generated by the Mambilla hydroelectric facility will be transmitted to the national grid by four 500kV DC transmission lines connecting Makrudi, and one 330kV DC transmission line connecting Jalingo. The combined length of the transmission lines will be 700km.

The engineering, procurement and construction (EPC) contract for the Mambilla Hydropower project was awarded to a joint venture between China Gezhouba Group (CGGC), Sinohydro and CGCOC (formerly CGC Overseas Construction), in November 2017.

The EPC contract is led by China Gezhouba Group, which is a subsidiary of the state-owned China Civil Engineering Construction Corporation (CCECC).

Studio Pietrangeli, an engineering company based in Italy provided the design for the hydropower project.

London-based Bennie and Partners along with Diyam Consultants were earlier engaged to carry out the feasibility study for the project which was later reworked by Lahmeyer International. Messrs Maps Geosystems completed the detailed aerial mapping for the project in 2008.

The project continued to suffer on different fronts, from inconsistent government policies, abandonment at various stages by previous contractors, numerous legal tussles between government and contractors, the host community unresolved dispute among others.

For instance, the federal government and the contractor who was first awarded the contract for the construction of the plant were apparently engaged in a legal tussle that ensued after the contract was re-awarded to a consortium of Chinese firms.

It has been gathered that the legal action was instituted in 2007 against the federal government and the Chinese firms that were later contracted at the court of arbitration in Paris, France, by the original contractor, Leno Adesanya, who was the chairman/CEO of Sunrise Power and Transmission Ltd over alleged breach of contract and work on project got stalled causing work on the project originally scheduled for completion in 2012.

It was further gathered that Sunrise, a firm that claimed to have been awarded the build, operate and transfer (BOT) contract in 2003, accused the Nigerian government of breaching its 2003 agreement when it granted a separate contract to Chinese companies four years later and sought an arbitration award of $2.3 billion.

The development was said to have caused the Export-Import (EXIM) Bank of China to lose interest in financing the Mambilla plant.

Certificate of No Objection issued by BPP on August 1, 2017, after the contract was awarded as a Joint Venture (JV) to Messrs CGGC/SINOHYDRO/CGCOC for $5.792 billion (about N2.1 trillion) in 2017 indicate that the federal government is getting funding for the project to the tune of $5.495billion (about N2trn) from the China Export-Import (EXIM) bank as a concessionary loan, translating to about 85 per cent of the sum, while the federal government is to provide the counterpart funding of 15 per cent.

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