How Cabal, Corruption Stalled Mambilla Hydropower Project …The Abba Kyari, Fashola and Malami Connection
How Cabal, Corruption Stalled Mambilla Hydropower Project …The Abba Kyari, Fashola and Malami Connection
By Michael Effiong
The Boss can now reveal exclusively that the reason the Mambilla HydroPower Project, has not taken off for years, laid idle and gathered dust, is because of high wire power play, selfishness and in some cases bare-faced corruption.
Our investigation has shown that government after government, Minister after Minister even President after President, all efforts to bring the project, which was conceived in 1972 to improve electricity supply in Nigeria, back to life and meet its set objectives of power generation and job creation, has always been frustrated by a myriad of forces.
Therefore, when in November 2017, the Minister of Power, Works & Housing, Mr. Babatunde Raji Fashola, announced that President Buhari has approved $5.792 billion (About N1.1trillion) for the construction of the 3,050 megawatts Mambilla Hydro-Power Project at Gembu in Taraba, many heaved a sigh of relief. At last, they believed, Nigeria would finally break the jinx of perennial power failure.
According to Fashola: “Several efforts had been made to bring it to reality but I’m happy to announce that this government approved the contract today to joint ventures of Chinese Civil and Engineering company for the engineering and turn-key contract, including civil and electro-mechanical works for $5.792 billion.
He noted that the scope of works of the project will include construction of four dams and 700kilometres of transmission, adding that it will unleash the nation’s potentials in agriculture, tourism and energy.
Six months after that cheerful statement, it seems however, that it is not yet uhuru. The Federal Government is yet to pay its 15% counterpart funds to the Chinese Exim Bank, and nothing has so far happened.
Knowing full well the importance of this project to the Nigerian people and the overall economy, we were agitated by this state of inertia and that was when we began digging, and our investigation has now revealed that Mr. Fashola did not present the full story.
We gathered that one of the main reasons for the latest delay of the project is actually a long-standing dispute that may have been overlooked when the President and Members of the Federal Executive Council (FEC) gave approval on August 30, 2017.
We also discovered an interesting twist where the Attorney-General and Minister of Justice, Mr. Abubakar Malami (SAN) gave sound legal advice which was ignored by the Chief of Staff to the President, Mallam Abba Kyari before the contract was awarded.
Furthermore, we discovered that after earlier aligning with the Attorney-General, curiously, the Minister of Power, Works and Housing, Mr. Babatunde Raji Fashola, SAN, backtracked, and switched to the advice of the COS, a move that would definitely do more harm than good to this project.
It is a riveting story of power play at the very highest level, the kind of intrigues that many thought would never occur in the Buhari Presidency.
To clearly understand this knotty matter, we have to take you through the whole gamut of hard facts spanning 18 years.
Documents in the possession of The Boss indicate that a Nigerian company, Sunrise Power Transmission Co. Limited had been in the forefront of promoting this Project from the outset.
Prior to the official tender process, Sunrise started promoting the Mambilla Project as early as year 2000. It reportedly engaged the offices of former President Olusegun Obasanjo and former Vice President Atiku Abubakar as well as the Nigerian Embassy in China.
Its successful promotion of the project led to the first state visit of then President Obasanjo to China in 2001 and Vice President Atiku in 2002.
It was thereafter, that a bidding process was opened for the project and the Ad-Hoc Inter-Ministerial Committee recommended Sunrise and its Chinese Partners. On April 7, 2003, the Committee wrote the President for approval to officially issue an award letter.
Therefore, on May 22, 2003, the then Federal Ministry of Power and Steel (Now Part of the new Ministry of Power, Works and Housing) issued a letter of Award to Sunrise Power and Transmission Company Limited in consortium with North China Power Group as Technical Partners. The contract was for the construction of a 3, 960MW Hydroelectric Power Project in Mambilla on a Build, Operate and Transfer (BOT) arrangement for a provisional six billion dollars. Sunrise accepted the offer.
In August 20, 2003, Sinohydro, which has its principal place of business at no.1 Ertao Biaguang Road, Xuanwu District, Beijing, PR China, North China Power Engineering Co. Ltd with its business address as 24a Huangsi District, Beijing and Sunrise located at Oluwa (Fowler) Road, Ikoyi, Lagos Nigeria, signed a contract to work together on what was then the 3, 960MW project. Sunrise engaged Sinohydro to construct the project on an Engineering, Procurement and Construction (EPC) basis.
After it has begun work, it got a shocking letter on September 3, 2003 from the Ministry of Energy (FMOE) claiming that the Federal Executive Council did not approve the memo recommending Sunrise for the project and directing Sunrise to tender for the project when it is advertised.
Sunrise sought a resolution without success. Sunrise and North China engaged Chief Afe Babalola, (SAN) to demand compensation.
A letter written by Chief Babalola dated February 4, 2005, read in part: “Your ministry cannot seek to repudiate the contract as it has attempted to do in the Ministry’s letter ….not after our clients have incurred expenses on the preparation incidental to the execution of the project.
“Consequent upon the preliminary steps towards execution of the contract, our clients have incurred well over Three Million Pounds while there are commitments to several consultants local and international in excess of Thirty Million British Pounds.”
While the dispute was on, Sunrise and it partners were still at work. An indication of this was a letter of intent written on April 15, 2005 by Dai Chunning, General Manager, Banking Department oF China Export-Import Bank to Sinohydro Corporation indicating its interest to provide $5.5 Billion for the Mambilla Project; the bank further stated that “We perused the information provided on the issue and are pleased to show interest and support in the proposed project by way of this Letter of Interest”.
Nothing was heard on the project until May 29, 2007 when, allegedly influenced by a Senior Government official, the Government awarded a part of the SUNRISE contract (Lot I, Civil/Hydraulic Steel Structures) of the (2,600MW Mambilla Hydroelectric) First Phase of the project to Messrs CGGC/CGC Ltd, in the sum of US$1.46billion.
The source of funding envisaged at the time of award was a combination of an Exim Bank of China loan of US$1 billion and funds from the Excess Crude Savings Account.
Of course, Sunrise did not take this lying down. It took the matter to the Federal High Court, Abuja suit No. FHC/ABJ/CS/384/2007. The defendants in the case were The Minister of Energy, The Attorney-General of the Federation, China Gezhouba Group Corporation (CGGC) and China Geo-Engineering Corporation (CGC).
Late President Umaru Musa Yar ‘Adua directed the Federal Ministry of Justice to investigate the Breach of Contract and USD 960 Million (Nine Hundred and Sixty Million United States Dollars) damage claim filed by Sunrise, and a Report (a copy of which is in our possession) from the Federal Ministry of Justice Indicted the Federal Ministry of Energy and CGGC/CGC of Gross Violation of Sunrise’s BOT Contract.
Furthermore, Mr. Michael Kaase Aondoakaa noted that Sunrise was not duly disengaged as Contractor on the project before government went ahead in May 2007 to engage CGGC/CGC for the same project.
He therefore, opined that Sunrise was in strong legal position to pursue a successful claim against the Federal Government; stating that “The best interest of the country can only be served by an amicable settlement of the parties so as to avoid the embarrassment that litigation would bring (to) the image of the country.” He sought Presidential approval to explore efforts of settlement of the matter.
Following a Presidential Visit to China in 2008, word reached late President Yar’Adua about an alleged $15m bribery that led to the award of the $1.46 billion contract to CGGC/CGC on May 29, 2007.
Late President Yar’Adua, we gathered then invited Sunrise, then Minister of State, Power (Late Hajiya Fatima Balaraba Usman), Minister of State and the accused Presidential official for a meeting.
After the meeting, President Yar Adua instructed then Attorney-General, Mr. Michael Aondoaka, SAN, to cancel the CGGC/CGC contract and restore the BOT Contracts to Sunrise immediately which was done at the Vice President’s Conference room in the presence of all Directors and Permanent Secretaries of both the Ministry of Power and the Ministry of Justice.
After this unfortunate episode, Sunrise agreed to resolve its legal dispute against the Federal Government and CGGC/CGC Consortium amicably, by proposing that Sinohydro Corporation in partnership with Sunrise, on the one hand, should form a Consortium at a cost to be determined by the final project design to be undertaken.
In October 2012, the Federal Government decided it wanted to own the Mambilla HydroPower Project and wanted an urgent settlement. This led to the signing of the Settlement and General Project Execution Agreement (GPEA) between the Federal Ministry of Finance, then Honourable Minister of State, Power, Architect Darius Ishaku now Governor of Taraba State signed, and then Solicitor-General of Federation, Mr. Abduallahi Yola signed for the Federal Government.
Sunrise and Sinohydro also signed but CGGC and CGC refused to sign because the Ministry of Power/Federal Government had allotted only 30% of Engineering Procurement and Construction (EPC) works to them.
When the Federal Government filed the Settlement Agreement in Court at the Federal High Court, Abuja, the Court rejected it because CGGC/CGC did not sign the Settlement and GPEA Agreements.
Thereafter a Stakeholders’ Meeting was convened at the Ministry of Power on November 23, 2012 and over 40 Stakeholders reportedly attended.
It was at this meeting that Mrs. Zainab Kuchi, new Minister of Power and the Solicitor-General of the Federation signed a new Out of Court Settlement Agreement with Sunrise (Its Chairman, Mr. Leno Adesanya signed) and also a new GPEA with Sunrise and Sinohydro (Its Technical and Financial Partners) was affirmed with a mandate to execute 100% of the EPC Contract.
In 2013, then President Goodluck Ebele Jonathan during a State Visit to China was called upon by the Chinese President “To please consider both Sinohydro and CGHC as EPC Contractors.”
The new Minister, Professor Chinedu Nebo then appealed to Sunrise to vote CGGC (Not CGC) as Co-contractor, a position that was accepted by Sunrise so that the project will be up and running.
As a result of that parley, On January 14, 2015, the Federal Ministry of Power, issued an Award Letter (No FMP/6145/S.11.1.185 of January 14, 2015) to Messrs CGCC and Sinohydro, specifically informing both Chinese companies that “Please note that based on the General Project Execution Agreement and Terms of Settlement agreed on the 23rd November, 2012 between the Federal Government on one hand and Sunrise/Synohydro on the other hand, Sunrise Power and Transmission Co. Ltd will serve as local content Partner on the Mambilla Project”
When President Muhammadu Buhari assumed Power, like all past Presidents, the issue of power was key on his agenda. In fact during one of his very first interviews on Channels Television in 2015, he stated that “The 3050MW Mambilla Hydropower Projectis stalled because FGN refused to pay 15% counterpart funds to Chinese Contractors; Just 15 per cent”.
It was not therefore, a surprise that on June 29, 2015, President Buhari reportedly hosted Alhaji Lawal Idris for over an hour at the Presidential Villa. He was in the company of Mr. Leno Adesanya, the Chairman/CEO of Sunrise.
We gathered that Adesanya presented a comprehensive briefing on the history of his company’s involvement with the Mambilla Power Project and how Sunrise, his company already has subsisting contractual agreements with the Federal Government as regards its execution.
There was an indication that since there was another Sheriff in town, the project will start revving again. When it didn’t, Sunrise wrote Mr. Babatunde Raji Fashola, (SAN) on February 26, 2016, notifying him that it had held joint meetings with the two companies (SINOHYDRO and CGGC) in Beijing, and they have agreed to split the EPC Contract on a 50/50 basis; The Minister notified his Permanent Secretary, Mr. Louis Edozien in the letter.
A month later, on March 8, 2016, Engr. E.O. Ajayi, Director (Energy Resources) on behalf of the Minister, wrote to Mambilla project Consultants, Coyne et Bellier/Decrown, urging the company to send a reminder to Messrs Sinohydro and Messrs CGGC to submit the cooperation agreement detailing the division responsibility/section of works of the parties, noting that the consortium is jointly and severally responsible for the full implementation of the project. The Consortium was directed to submit the said agreement not later than March 31, 2016.
That was not all, many people involved in the project were now more enthusiastic when it was announced that President Buhari was preparing his first official visit to China.
He eventually embarked on the 4-day visit on April 10, 2016 but for some inexplicable reasons, this all important Mambilla project was not on the agenda.
We gathered from the delegation, that with pressure from Mr. Leno Adesanya, Governor Nasir El Rufai of Kaduna State, Governor Mohammed Badaru Abubakar of Jigawa State and Chief Audu Ogbe, decided to bring the situation to the attention of a very angry President Buhari, who was upset that the Taraba Governor was not invited on the trip by the Minister of Power Works and Housing. In any case, that was how Mambilla hit the front burner and became one of the key issues of the Presidential visit.
On his return later that month, President Buhari sent his Chief of Staff back to Beijing to conclude the negotiations, which resulted in the agreed price of $5.79 billion.
In addition, on April 25, 2016, Mr. President wrote through his Chief of Staff (Letter No. SH/COS/05/A/1847) to the Honourable Attorney-General, Mr. Abubakar Malami, SAN, copying the Minister of Power Works and Housing (HMOPWH), to propose a strategy for resolving all the legal issues and disputes relating to the Mambilla Power Project including the matter of the “warring parties”.
As per the directive given by Mr. President, The Boss learnt that the Attorney-General held series of meetings with the parties involved, and on May 20, 2016 in a letter addressed to Mr. Babatunde Fashola SAN, the Attorney-General made the following recommendations:
1) Government should engage Sinohydro Corpration and CGGC jointly for the purpose of executing the Mambilla Project in line with the Spirit of the Letter of Award dated January 14, 2015, on a 50-50 basis or based on other technical parameters to be determined by the Project Consultants
2) Engage the Chinese Embassy in Nigeria/Chinese Government to ensure the success of the plan to award the job to two companies
3) Sunrise Power & Transmission Company Limited should be engaged as Local Content Partner on the Mambilla Project as a means of accommodating its prior contractual interests on the project
4) A joint meeting of the Federal Ministry of Justice and the Ministry of Power, Works and Housing for the purpose of streamlining the above positions and advising Mr. President through the Chief of Staff accordingly should be convened.
Curiously, six days after this legal advice, the Chief of Staff allegedly invited a Kaduna-based Chinese Company (CGC Nigeria Limited) to a meeting at the Presidency.
Present at the meeting were Sinohydro, CGC, CGGC, Mr. Fashola and some top Ministry officials. It was at this meeting that Mallam Kyari urged these three companies to cooperate and form a Joint Venture.
Despite being told by the Chairman of Sinohydro, and Fashola about the existing agreements with Sunrise, the CoS insisted that they should go ahead with the new arrangement, and instructed the Chinese to deal directly with the Presidency and the Ministry; not their local partners.
Not still satisfied with that move, on January 23, 2017, the Attorney General, wrote the Minister of Power, Works and Housing. The letter, HAGF/SH/2017/Vol.1/14 was titled: Request To Convene A Meeting On Procurement Process For The 3020MW Mambilla HydroElectric Power Project in Light of Outstanding Legal Issues.
Fashola replied three days later in a letter: FMP/6145/S.11/Vol.11/517, noting that his ministry welcomes the meeting requested that aims to resolve all issues raised.
The Minister also wrote a letter to Mr. Leno Adesanya on May 3, 2017 in response to a letter that the former had written him on March 31, 2017. He asked Mr. Adesanya to present his observations at a Stakeholders Meeting to be scheduled by the Chief of Staff to the President as proposed by the Attorney-General.
While everyone involved was looking forward to that meeting, Mallam Abba Kyari fired a letter he personally signed to The Honourable Minister of Power, Works and Housing on May 22, 2017 with the title: Re: Letter Referenced FMP/6145/S.II/569 In Respect of Mambilla HydroProject
The two paragraph letter stated:
“Further to our discussion, kindly note that Messrs Sunrise Power and Transmission Company Limited is not party to the existing arrangements on this project.
“The Contractor engaged is Messrs CGGC-Sinohydro-CGCOC Joint Venture”.
Interestingly this letter was written when Mr. President was having his medical vacation abroad.
Messrs Sunrise must have been enraged by this unilateral decision of the Chief of Staff and consequently wrote the Vice President, Professor Yemi Osinbajo, who was Acting President at the time to intervene.
Mr. Leno Adesanya, who signed the letter as Chairman/CEO, updated the Acting President on the project, alerting him that it was the Chinese that informed them of the sad news.
He went on to make an appeal: “Your Excellency, permit me to say that over the years, we have pleaded with our financial partners to be patient with the FGN as various developments that delayed the project played out.
“We are however constrained to observe that the latest developments, if not rectified in line with the legal recommendations of the HAGF, prior to seeking FEC approval, shall leave us with no choice but seek legal redress where appropriate including against the Chinese government. We are however, confident that with your expected intervention, this reluctant prospect can be avoided.
“We trust your sense of justice and your commitment to the early realization of this project…”
The Attorney-General certainly was also unhappy with this development, little wonder that on July 24, 2017 he also wrote the Acting President.
Titled “Re: Correspondence In Respect Of The Procurement Process For The 3050MW Mambilla Hydro-Electric Power Project In Light Of Outstanding Issues”, he noted that following Mr. President’s directive of April 2016, he had developed a legal opinion, and had forwarded same to the Minister of Power, Works and Housing.
He re-affirmed his recommendation insisting that he informed the Chief of Staff to the President and Minister about this and he wanted the Acting President to give appropriate directive.
Well, it seemed the letters from these two men did not carry much weight because just like he had promised in the meeting in 2016, and his letter of 2017, Mallam Abba Kyari had his way and the Nigerian Company was kicked out. There was no word from the Vice President or his office on the matter.
We were told that many moves were made for a meeting, even President Buhari’s main man, Alhaji Mamman Daura, reportedly tried to arrange one of such meetings on September 30, 2017, but the Chief of Staff will have none of it.
He advised Mr. Leno Adesanya, whose company, Sunrise, had been short-changed to “go to court”.
Of course following the November announcement by Fashola, there was a chain reaction. Sunrise activated the Arbitration Clause of its November 23, 2012 GPEA Agreement, and approached the International Chambers of Commerce, International Court of Arbitration in Paris, France to take charge; and it is claiming $2.3 billion in damages and profit loss.
The ICC Case No. 23211/TO is between Sunrise, Federal Government of Nigeria and Sinohydro Corporation Limited.
Already the legal fireworks have begun: While Mr. Jeremie Chouraqui is lead Counsel for Sunrise, Mr. Richard Smellie is representing Sinohydro while Supo Shashore, SAN is representing the Federal Government of Nigeria.
Despite this move at arbitration, Sunrise, through its Lawyer, Mr. Femi Falana, SAN has written to the Attorney-General (copied to Minister of Power, Works and Housing and Presidency) still seeking ways of an amicable settlement; because Sunrise wants to execute the EPC contract based on the full compliance of the July 24, 2017 recommendations of the learned Attorney-General, Mr. Abubakar Malami, SAN, to the Federal Government.
The February 2018 letter was a last ditch request and appeal to the nation’s Chief Law Officer to intervene and midwife the resolution in line with his earlier recommendations which will save Nigeria over $2 billion, as well as stem the negative publicity that the trial will generate, especially now that Nigeria is trying to project itself as an investment-friendly destination.
In a bid to get a clearer picture of this drama, we decided to speak directly to the Vice President, Professor Yemi Osinbajo (Through his Senior Special Assistant, Media, Laolu Akande), Mallam Abba Kyari, Mr. Louis Edozien, the Permanent Secretary as well as Mr. Leno Adesanya.
We wanted to know exactly why Sunrise was disqualified, which company has taken its place as Local Content Partner, and since the Chinese had committed to paying $millions of dollars to Sunrise, who will be receiving this payment? We also wanted to enquire if there was a tender and under which circumstances did Bureau of Public Procurement (BPP) issue these Chinese firms Due Process Certificates?
As at the time of filing this report, only the Minister of Power, Works and Housing, Mr. Babatunde Fashola, SAN, has reached out to us. He said he was not authorised to discuss Federal Executive Council meetings and decisions with the media.
He spoke three times informally to our Publisher, but declined to comment specifically on the issues raised. He stated that if there were any clarifications or observations to our story, they will be conveyed to us through the official channel.
The other dramatis personae have not responded. For sure, we have not heard the last of this extremely complicated saga.