The Mambilla hydro-power project, the biggest of such infrastructure in the country, has been in gestation for 35 years. This is despite millions of dollars already committed to it. Once caught in the labyrinth of contractual legal disputes, reviews and counter-reviews, this well-thought-out project should not be allowed to become another Ajaokuta Steel Company with an indefinite completion time.
The 3,050-megawatt project, originally meant to be completed in five years, was initiated in 1982. But it was under the Olusegun Obasanjo administration in 2007 that a Chinese consortium – Gezhouba Group and China Geo-Engineering Corporation – was awarded a contract worth $1.46 billion for the Lot 1 aspect of the project. The government paid $219 million or 15 per cent as advance fee.
However, for inexplicable reasons, the contract was cancelled. That action jeopardised the Chinese government’s $2.5 billion funding plan for the project. A German company, Lahmeyer, which had in 2005 got a $3.2 million feasibility study contract for the work, eventually lost it when the World Bank blacklisted it for being enmeshed in a bribe-for-contract scandal in Lesotho’s Highlands Water Project.
Since then, every government has expressed the willingness to drive the project, given its critical role as a game-changer in the country’s electricity crisis. In 2013, the Federal Government had targeted 2018 as the completion date, even as the then Minister of Power, Chinedu Nebo, and his deputy, Mohammed Wakil, under the Goodluck Jonathan administration, gave conflicting figures of $3.2 billion and $7 billion respectively, as the cost of the contract.
The Muhammadu Buhari government has no concrete plans for the project just yet. This is sad. It is for this reason that the Taraba State Governor, Darius Ishaku, cried out recently to the authorities, saying, “Let’s start building the facility now…” when the Minister of State for Power, Works and Housing, Mustapha Shehuri, visited the state.
The ministry’s senior minister, Babatunde Fashola, had earlier confirmed that the feasibility study and Environmental Impact Assessment had been completed. But his revelation that the land for the project had not been acquired, let alone paying compensation, raised doubts about government’s seriousness. However, Fashola said the governor had promised to take up these challenges.
The Mambilla project, as a priority, comes out in bold relief when the damage to Nigeria’s over-reliance on gas to energise its power plants is unfurled. Pipelines were ruptured between 3,500 and 4,000 times from June 2014 to June 2015, says the Minister of State for Petroleum Resources, Ibe Kachikwu. Government’s lineal approach to power generation for decades has put the economy at the mercy of militants in the Niger Delta region who engage in perennial oil/gas pipelines vandalism. With insufficient gas supply to the generating companies, which causes the national power grid to suffer frequent systemic collapse, the upshot is routine total blackout.
In 2011, the power grid collapsed 28 times in nine months, according to reports. In 2014 and 2015, total system collapse occurred 13 and 10 times respectively. Worse, some of the generating stations run under Nigeria Integrated Power Projects at Alaoji, Geregu, Olorunsogo and Sapele are in disuse because of gas supply constraints.
As a result, industrial output is abysmally low. Many manufacturing firms have either collapsed or relocated to neighbouring countries. Those still in operation do so at a heavy cost. A Manufacturers Association of Nigeria report in early 2016 said its members spent N20.8 billion monthly on power generation for production. It spiked costs up to 70 per cent, a burden usually transferred to consumers.
This ugly scenario calls for the broadening of our electricity generation mix, involving solar, coal, biomas, gas and hydro. Brazil, a developing economy like ours, offers a lesson in hydro-energy. Its power generation is now 70 per cent hydro-based with 158 hydro-electric plants that produce more than 89 gigawatts; thus, making its electricity generation the third highest in the Americas.
With work about to be completed on the 700MW Zungeru hydro-power project, Fashola raised some hope last June that government would soon shift attention to the Mambilla. But he provided no details. Funding appears to be the biggest obstacle, given the present economic realities.
There are two options open to the government: foreign direct investment from world-class energy operators and government’s direct financing. Foreign investors have always expressed interest in our privatisation programmes. For instance, the Abu Dhabi National Energy and Israel Electric Corporation/Integrated Power Connect Projects, among others, showed interest in power generation companies when the power sector was privatised in 2013. Such companies are never favoured by the country’s dodgy business template, leading to key national assets being snapped up by dodgy domestic consortia hastily put together for that purpose. Whether the cost is $3.2 billion or $7 billion, what is required now to attract reputable investors is to liberalise the business environment.
However, the alternative to this model is self-financing. It is a hard choice that goes with a lot of responsibilities. Focused political leadership and availability of funds are critical. But the disaster that the ASC and the four comatose refineries exemplify seems to negate this choice. Figures from the United States Energy Information Administration last year showed that Nigeria could have effortlessly pulled the project through if governance under Jonathan had not been so visionless and irresponsible when $69.9 billion (2010); $99.2billion (2011); $96.7billion (2012); $86.4 billion (2013); and $78.5 billion (2014) generated from crude oil sales were frittered away.
As industries groan under energy shortage, real economic growth and job creation will continue to be elusive if Nigeria does not take the bull by the horns. It is indefensible that a country of 170 million people share about 4,000MW of power, whereas South Africa boasts 43,600MW for its mere 55 million population. Responsible governance demands a radical shift from this sour narrative.