FG Seeks $5bn Chinese Loan for Mambilla Power Project
Nigeria has formally requested for loan from China Exim Bank to build the 3,050 megawatts (MW) Mambilla hydropower generation plant, whose construction was billed to gulp $5.8 billion, THISDAY has learnt.
It was gathered from the officials of the Ministry of Power during a presentation to the new Minister of Power, Mr. Saleh Mamman, and the Minister of State, Mr. Goddy Jedy-Agba, that the Ministry of Finance had applied to China for the loan.
Under the contract financing arrangements, EXIM is to provide $4.93 billion in loan, representing 85 per cent of the capital funding, for the project while Nigeria will provide the balance of $870 million or 15 per cent of the cost outlay.
The Federal Executive Council (FEC) had on August 30, 2017 approved the award of contract for the project to China Gezhouba Corporation, Sinohydro Corporation Limited and CGOC Group Limited.
In November 2017, the then Minister of Works, Housing and Power, Mr. Babatunde Fashola (SAN), signed the contract.
During a state visit to China on September 7, 2018, President Muhammadu Buhari was told by the President of CGCC, the construction company, Prof. Lyu Ze Xiang, that “our target is to commence the project early next year (2019).”
However, THISDAY gathered that the project would not have started as scheduled unless the federal government made a formal request for loan to build the $5.8 billion project.
“Under the terms of the contract, China Export Import (EXIM) Bank will provide 85 per cent of the cost, while the federal government is to bear 15 per cent. The 85 per cent to be provided by EXIM is the loan being requested by the federal government. It is a formal request but it does not mean that EXIM bank will hand over the cash to the federal government. The money will be paid directly to the Chinese contractors on behalf of the federal government. But Nigeria has to make a formal request for the loan. Nigeria will also pay her 15 per cent counterpart funding,” a top official of the ministry of power told THISDAY at the weekend.
THISDAY gathered that during the presentation to Mamman and Jedy-Agba, said a team from the China-Exim Bank was recently in Nigeria to appraise the country’s readiness to commence construction of the power plant
The officials told the new ministers that the Nigerian Sovereign Investment Authority (NSIA) was ready to pay off Nigeria’s counterpart funding in the project through the Presidential Infrastructure Development Fund (PIDF).
NSIA had said it was appointed as the programme manager of the PIDF, adding it received $650 million from the National Economic Council (NEC).
NSIA added that the funds have already been disbursed for construction works on Lagos-Ibadan Expressway, Second Niger Bridge, and Abuja-Kaduna-Zaria-Kano Road.
It said that till date, it had disbursed N77.6 billion under the PIDF programme with Mambilla hydropower and East-West Road being the other projects undertaken under PIDF.
The construction of the hydro power project would take approximately six years because of the extensive nature of the scope of work, which include the construction of four dams, one of which is expected to be 150 metres high, another two to be constructed will be 70 metres high while the smallest dam will be 50 metres in height.
The project was initially enmeshed in a legal crisis following an allegation by the local content partner, Sunrise Power and Transmission Company Limited, that some forces within the government circles wanted to sideline it.
But the Director of Legal Services in the ministry, Mrs. Adetutu Soetan, had said the federal government was hoping to vacate a $2.3 billion suit filed against the government by Sunrise Power and Transmission Company Limited (SPTCL).
Soetan said the government had through its legal representatives which include the African Law Firm, the ministry of justice and lawyers from the ministry, made its position on the case known to a London tribunal.
As reported from thisdaylive