President Muhammadu Buhari has declared that the federal government does not have $200 million to pay Sunrise Power Transmission Company of Nigeria Ltd (SPTCL) as final settlement claims over the Mambilla dispute.
SignatureTV reports that Buhari was reacting to a request by Abubakar Malami, the attorney-general of the federation, who was seeking approval to pay the company the sum, which is a precondition to withdraw its arbitration against Nigeria at the International Chamber of Commerce, ICC, in Paris, France, over an alleged breach of contract.
In a memo to the president dated March 26, 2020, Malami asked him to approve the payment of the $200 million to Sunrise Power as “full and final settlement” to discontinue the arbitration and set the government free from all liabilities in the dispute.
However, Buhari, in his reply dated Monday, April 20, said “FG does not have USD 200 million to pay SPTCL”, SignatureTV reports.
Nigeria is currently facing a serious fiscal crisis, with crude oil selling for less than half of the budget price.
The federal government has slashed its budget and dipped into stabilisation savings at the Sovereign Wealth Fund Authority in order to augment federation allocations.
The excess crude account, ECA, now has a balance of less than $100 million.
With the COVID-19 pandemic upsetting the global economy, there is yet no end in sight to the country’s situation.
Sunrise Power had, on October 10, 2017, dragged Nigeria to arbitration in Paris, seeking a $2.354 billion million award for “breach of contract” in relation to a 2003 agreement to construct the 3,050MW plant in Mambilla, Taraba state, on a “build, operate and transfer” basis.
The company also joined Sinohydro Corporation Limited, the Chinese company currently handling the project, in the arbitration.
Specifically, Sunrise asked for “success fee” of $1.044 billion under the general cooperation agreement between it and Sinohydro; $750 million for “loss of profit” as local content partner; $263 million as accrued costs (“wasted expenditure”) from 2001 to 2017; $172 million as litigation cost; and $125 million as “reputational loss”.
To resolve the dispute, SignatureTV noted that Nigeria entered into negotiations with Sunrise Power in November 2019 and proposed to pay $100,000 million as against the $500 million being demanded by Sunrise.
The federal government team, led by Malami and Suleiman Adamu, minister of water resources, made a proposal of $200 million to Sunrise as a “middle ground” and the company accepted the offer subject to approval by President Muhammadu Buhari.
The settlement claim was to be paid “within 14 days” of the execution of the terms of agreement on January 21, 2020, but the timelines have now been adjusted.
The government team also agreed to pay a penalty of 10 per cent in case of any default in fulfilling the settlement agreement, in addition to restoring Sunrise as the local content partner in the $5.8 billion hydroelectric project.
The latter two conditions have now been expunged from the revised settlement agreement presented to the president by Malami on March 26.
An addendum dated March 25, 2020 containing the revised terms was attached to the documents sent to the president by Malami, the medium reported.
In it, representatives of the federal government and Sunrise Power proposed that the $200 million would be in “one or two tranches with 150 Calendar days (5 months)” from the date of the execution of the agreement.
The first $100 million was to be paid within 30 days of execution and the balance “shall be paid within 90 calendar days (3 months) of the first payment” with a grace period of 30 days.
But Nigeria’s inability to settle the settlement claim may further compound matters.
Leno Adesanya, chairman of Sunrise, had in a letter dated March 31, 2017 to Babatunde Fashola, then minister of power, accused him of reneging on his promise to support the project.