The Federal Government through the Federal Ministry of Power, Works and Housing yesterday, communicated a notification of final acceptance for Gezhouba-Sinohydro-Cgcoc, a subsidiary of China Energy Engineering Corp Ltd, towards the construction of Mambilla power plant.
By this action, Nigeria has committed itself to a contract to execute 3,050MW of hydro power in Gembu, Taraba state, at the cost of $5,792.5 billion in six years. The project will include the construction of four dams and 700 kilometres of transmission lines.
According to the terms of the contract, Nigeria will provide about $870 million representing 15 percent of the amount while the China Energy Engineering Corp will finance the rest through funding from the China Exim Bank.
Bogged with funding constraints since the project was first conceived in 1982, the Mambilla power project is a monument to Nigeria’s failed leadership as previous administrations frittered away huge oil incomes while critical national project suffers.
During the Jonathan administration, Nigeria earned over $60billion every year from crude oil sales in each of the five years he spent in the saddle, but could not deliver on the project.
Olusegun Obasanjo, in 2007 awarded the contract to a Chinese consortium – Gezhouba Group and China Geo-Engineering Corporation – at the cost of $1.46billion for an aspect of the project according to reports and paid $219 million as 15 percent advance fee but the project was cancelled. A German company was also involved in an aspect of the project but was enmeshed in bribery controversy that got it blacklisted by the World Bank.
“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,” said Fashola after the executive council meeting where the project was approved last month.
The Mambilla power project when completed will raise Nigeria’s hydro power capacity to over 4500MW. Experts say the potentials for the economy are enormous.
According to the World Bank Infrastructure Country Diagnostic (AICD) and a 2015 McKinsey report, African countries are losing 1% of gross domestic product per annum due to poor power infrastructure. Nigeria’s estimated GPD loss from 1999 to 2015 is N71 trillion due to under investment in power infrastructure.
However there are concerns by industry experts about the possibility of completing of the project as the current administration enters its last budget cycle, and the lack of continuity of project execution in a new administration in Nigeria.
“The key concern is whether it can be sustained, if for example there is a change in government,” Chuks Nwani, an energy lawyer based in Lagos told BusinessDay by phone.
Investments in Nigeria’s transmission capacity would need to keep pace with growth in generation capacity. New investments into the grid have increased its capacity to wheel out as much 6200 MW of power according to data from the Transmission Company of Nigeria.
But with generation to the grid around 4,000 MW and the DisCos ability to distribute less than 4,000MW, leading to the current stranded capacity of 2,000MW, there have not been opportunity to test the claim about improving transmission capacity.