MONDAYBUSINESS ECONOMIC INSIGHT What to expect for 3050MW Mambilla hydropower in 2018

The 3050 megawatts (MW) Mambilla hydropower project which has long been on the drawing board was stirred in November 2017 when the Federal Government and Chinese contractors signed a N2.1 trillion (about $5.792 billion) contract deal in Abuja to execute i

In June 2017, the Minister of Power, Works and Housing, Mr Babatunde Fashola, announced that he obtained a ‘No Objection’ clearance certificate from the Bureau of Public Procurement (BPP) and was working on raising a memo to present the project at the weekly Federal Executive Council (FEC).

The FEC then approved the project award on August 30, 2017, two months after the procurement terms were certified by the BPP while the contract was signed about two months after.

The federal government eventually signed the contract in November 2017, marking the beginning of greater expectations of the biggest single power generation project in the country.

The project had its first contract awarded in 2007 under President Olusegun Obasanjo government but was cancelled by a different administration.

The signing ceremony which was supervised by the minister is said to be a new dawn for Nigeria’s power sector as the project has lingered for about 40 years, since its idea was conceived.

After the signing ceremony, Fashola hinted that after the contract signing, the Minister of Finance, Mrs Kemi Adeosun took over the financial negotiations with the Chinese financier - The Chinese Export Import (EXIM) Bank.

Speaking to newsmen at an educative forum for the Power Sector Reform Programme (PSRP), Fashola said once the negotiations are completed, he will be consulted and then government can prepare to flag it off for construction.

He also said signing the Mambilla contract shows that the present government was committed to reforming the power sector adding that, “There are problems but there is a very clear plan” and working with the World Bank to implement the PSRP.”

How it fared earlier

Prior to the 2017 achievement of signing the project contract for the second time since it was conceived, yearly budgetary allocation at the Budget Office since 2010 shows that over N1.8bn was earmarked on doing certain studies and consultancies for the project.

In 2010, about N934.9m was allocated to the project for the geotechnical/geodetic surveys, orthophoto mapping of the site, the Environmental Impact Assessment (EIA), land acquisition, resettlement and compensation of inhabitants at the site. Another N69.7m was pegged to review the feasibility study and other spending.

In 2013, project management and consultancy services got N200m. It got another N300m in 2014 for consultants to do a detailed Engineering Design and Project Management Supervision of the project. The annual report of the ministry for 2014 also indicates that the detailed engineering design was completed but another N15.1m was allocated to the same item in 2015. For Year 2018, the same item which was said to be completed three years ago will get N512m, budgetary figures indicate.

An annual report for 2012 showed that the federal government and the states will be responsible for the cost of resettlement and project management estimated at about $310m of which the federal government had already spent 49.5m as at December 2012.

In 2016 under President Muhammadu Buhari N407m was allocated to the project with a vigorous revival. With incessant attacks on gas pipelines and the continuous blackout due to over dependence on gas-based power stations, government pushed to go beyond the thermal the generation and raise the hydropower capacity to the national grid.

FG to spend N9.82bn in 2018 budget

Already, the federal government has made provisions for its financing in the 2018 budget appropriation, the Daily Trust record shows. From the N434bn budget the ministry is getting for capital projects in 2018, the sum of N9.82bn has been pegged on the Mambilla project.

The expenditure breakdown shows that consultancy services will gulp N1.3bn including a N610m peg on consultancy works for the valuation and compensation of the affected communities. There is a N200m allocation for the Federal government and Taraba state project implementation team while another N512m will be spent on the engineering design, management and supervision of the project.

Government will also spend N8.5bn as part of the 15 per cent counterpart funding for the project.

Completion to 6yrs, ready by 2023 take

The $5.79bn project is expected to be completed in six years from now which is by Year 2023. The funding consists of $4.92bn from the Chinese Exim Bank and other Chinese lenders which is 85 per cent of the contract sum while the Federal Government will provide the 15 per cent amounting to $868.87 million.

A breakdown of the contract works obtained by the Daily Trust show that the project will cover four large dams which are Nya, Sumsum, Nghu and Api Weir, and two underground power house of 12 units of 250mw each all around the Mambilla plateau in Taraba state.

The other project components include two units of 330 kilo volt (kv) of 700 kilometre (km) transmission lines to Makurdi in Benue state and Jalingo. There will about 120km of access roads connecting the project site and nearby communities and the resettlement of an estimated 100,000 impacted persons.

The three Chinese firms to handle the project are China Gezhouba Corporation, Sinohydro Corporation Ltd and CGOC Group Ltd.