FG agrees final terms with Chinese firm on Mambilla power plant
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 seen as significant for Nigeria’s quest to boost power supply in the country.
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 one percent 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.
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