Sunrise Power Transmission Company of Nigeria Ltd (SPTCL) has recently agreed to waive the US$ 500M penalty fee incurred by the federal government of Nigeria over multiple defaults of a US$ 200M settlement agreement on the Mambilla hydroelectric power project in Taraba state.
This comes a few weeks after the Nigerian Minister of Power, Eng. Abubakar D. Aliyu announced that discussions were being intensified with the parties involved to resolve all hindrances preventing the full take-off of the project.
The being of the US$ 500M penalty fee
SPTCL is the contractor who was first awarded the contract for the implementation of the 3,050MW Mambilla Hydroelectric Power Project on a “build, operate and transfer” basis, back in 2003.
In October 2017, the company dragged the federal government of Nigeria to the ICC International Court of Arbitration in Paris, France, seeking a US$ 2.354bn award for “breach of contract” after the FG dropped the company for a Chinese firm’s consortium.
Also Read: Discussion to resolve issues and resume work on Mambilla power project intensifies
To resolve the issue, the FG agreed to pay Sunrise Power US$ 200M “within 14 days” of the execution of the terms of the agreement on January 21, 2020, and also pay a penalty of 10% in case of a default in fulfilling the settlement agreement, in addition to restoring Sunrise as the local content partner for the US$ 5.8bn project.
The government, however, did not comply with the agreement, and therefore the penalty fee accumulated to a total of over half a billion dollars.
Best decision ever made over the Mambilla Hydroelectric Power Project
Speaking on the waiver, Kayode Ajulo, a fellow of the Chartered Institute of Arbitrators, United Kingdom, described the decision made by Sunrise Power as the best, as it signifies the end of all impediments relating to the Mambilla project.
“The claim and any other ancillary expenses, and/or interest from the date the settlement agreement was signed to date, is the best negotiation ever the government has made. There should be an end to litigation, the involved parties must resolve the issue and get to work from which Nigerian government and the people will benefit mainly therefrom,” said Ajulo.
