Electricity

Fed Govt agrees to pay $200m settlement for $900m Mambila power

The Federal Government has agreed to pay $200 million to Sunrise Power and Transmission Company Limited (SPTCL) as final settlement of the dispute over the Mambila power project in Taraba State.

The settlement deal signed on January 21, 2020, was sealed by Minster of Power, Sale Mamman, and Attorney-General of the Federation, Abubakar Malami.

The 3,050-megawatt (Mw) facility will be the second largest hydropower plant in Africa if completed, but has suffered severe delays since construction began almost 40 years ago.

In 2017, Sunrise Power, which claimed to have been awarded the build, operate and transfer (BoT) contract in 2003, dragged the Federal Government and its Chinese partners before the International Chamber of Commerce (ICC) in Paris, France, over alleged breach of contract.

It sought compensation of $900 million from the government and its partners. But the parties reached an arbitration settlement with Malami and Mamman signing on behalf of the federal government, Leno Adesanya signing as chairman and Chief Executive Officer of Sunrise, while Mr Peng Sheyin and Song Yuan signed on behalf of Sinohydro Corporation Limited.

The agreement reads: “On 10th October 2017, Sunrise Power and Transmission Company Limited submitted a Notice of Dispute and ICC Arbitration request against the Federal Republic of Nigeria and to Sinohydro Corporation Limited before the ICC International Court of Arbitration in Paris over breach of obligations under the General Project Execution Agreement (GPEA) dated 23rd November 2012 as executed by the parties.

“Under the above Request for Arbitration, Sunrise Power and Transmission Company Limited claimed damages amounting to not less than $900,000,000.00 as a consequence of a Respondents breach of the GPEA.

“Desirous of removing all legal impediments to the execution of the Mambila Hydro-Electric power Project, the Federal Republic of Nigeria and Sunrise Power and Transmission Company Limited have mutually agreed to settle the dispute in this arbitration amicably.

“The Federal Republic of Nigeria shall within a period of 14-days from the date of this Terms of Settlement, pay Sunrise Power and Transmission Company Limited the net (net of any deductions charges or taxes howsoever called) sum of $200million in full and final settlement of the claims in this arbitration.

“Should the Federal Republic of Nigeria fail to make such payment within the said 14-days period, the sum will immediately bear compounded interests at the yearly rate of 10 per cent and in addition, the FRN shall automatically reinstate Sunrise Power and Transmission Company Limited as the exclusive local content partner to the Mambila Hydropower project.

“Sunrise Power and Transmission Company Limited shall take immediate steps to provide a Deed of Acceptance of the above sum and a Deed of Undertaking stating that upon, and only upon, the receipt by Sunrise Power and Transmission Limited of the net sum of US$200,000,000 in full and in immediately-available funds on its designated bank account, Sunrise Power and Transmission Limited shall withdraw all of its claims against the Federal Republic of Nigeria and Sinohydro and more generally all and any claims of each Party to the arbitration against each other Party thereto shall stand irrevocably released, discharged and terminated. Each party shall thereupon formally withdraw and drop any and all of its claims against every other Party to the arbitration.

“The Terms of settlement hereof shall be entered as the Final Consent Award of this Honourable Tribunal in this arbitration proceedings.

“All disputes arising out of or in connection with the present Terms of Settlement shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said rules. The parties agree pursuant to Article 30(2) (b) of the Rules of Arbitration of the International Chamber of Commerce, that the Expedited Procedure Rules shall apply irrespective of the amount in dispute. The seat of the arbitration shall be Paris, France and the language of the arbitration shall be English.”

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