Nigeria announces $5.8bn deal for record-breaking power project

Nigeria has announced the award of a $5.8 billion contract to build what will be the largest power plant in the country. The 3,050-megawatt Mambila Hydroelectric Power project in Taraba state will be delivered by a consortium of Chinese state-owned construction firms.

The mega-project will feature four dams, between 50 and 150 meters tall, and take six years to complete, the Minister of Power, Works and Housing, Babatunde Fashola, told reporters in Abuja.

The Chinese Export-Import Bank will finance 85% of the development, with the Nigerian government contributing 15%. Fashola claimed the project would deliver far-reaching benefits.

“(Mambila) will have a transformational effect on all of Nigeria’s socio-economic development,” he said through a government spokesman, “It will have considerable positive impact on electricity supply nationwide, productivity, employment, tourism, technology transfer, rural development, irrigation, agriculture and food production.”

However, environmentalists have warned that the project will cause considerable disruption and displacement.

The Mambila plant has been in development for over 30 years, but previous administrations had made little progress.

In 2007, the government awarded a $1.4 billion contract to two Chinese construction firms for a 2,600-megawatt plant, but the agreement broke down soon after.

Attempts were made to revive the deal without success. But, the deadlock was broken by conversations between the presidents of China and Nigeria in 2016, according to the spokesman of Nigerian President, Muhammadu Buhari.

“The major breakthrough in the execution of this project was achieved when President Muhammadu Buhari initiated discussions at the level of the President of the Peoples Republic of China in the course of his State Visit (in 2016),” wrote government official, Garba Shehu.

The meeting resulted in the creation of a consortium of Chinese companies to deliver the project, according to Shehu, and an agreement that the Chinese government would commit finance to it.

President Muhammadu Buhari and Chinese President, Xi Jinping, shake hands in Beijing, during the former’s state visit in 2016.
Despite being one of the largest economies in Africa, over 40% of Nigerians live without access to electricity, according to World Bank figures.

Hydropower, one of the cleanest and cheapest forms of power, is a key target for development as Nigeria is currently exploiting just a fraction of its potential resources.

The country is also seeking to shift away from oil dependency, after plummeting oil prices triggered a recession.

The clear need for the Mambila project could make it more likely to succeed, some analysts believe.

“The prospects of project implementation starting are perhaps stronger than in previous decades,” says Elizabeth Donnelly, Deputy Head of the Africa Programme at UK think- tank, Chatham House.

“Nigeria continues, albeit slowly, with its complex power sector reform and badly needs to generate – and more importantly distribute – more power for its 180 million people.

Hydroelectricity is an important part of this mix, particularly for rural electrification.”