Powerchina Huadong Engineering Corporation provides $32.6 million supplier’s credit for 39MW Dadinkowa Hydropower Plant Project

On July 4, 2005, Nigeria’s Federal Ministry of Water Resources on behalf of the Upper Benue River Basin Development Authority signed a concession agreement with Mabon Limited (a petroleum service company). The concession agreement went into effect on August 4, 2016. The concession granted Mabon Limited authority to design, construct, install, operate and maintain a 39MW hydropower generating facility at Dadin Kowa Dam in Gombe State pursuant to a power purchase agreement (PPA) signed by the Federal Government of Nigeria and Mabon Limited. The $70 million independent power plant (IPP) project was financed according to a 60-40 debt-to-equity ratio and implemented on a Build, Operate, and Transfer (BOT) basis. African Finance Corporation (AFC) and Powerchina Huadong Engineering Corporation were the sources of debt financing. In 2018/2019, Powerchina Huadong Engineering Corporation issued a $32.6 million supplier’s credit to Mabon Ltd. for the 39MW Dadinkowa Hydropower Plant Project. The borrowing terms of the loan are unknown. However it is known that the borrower was expected to use the proceeds of the loan to partially finance an EPC contract with Powerchina Huadong Engineering Corporation (Hydro China Huadong Engineering Corporation), which was signed on September 25, 2013. The purpose of the project was to construct a 39MW (or 40MW) Dadinkowa hydropower plant — with two, 20MW power generation units (francis turbines with 20MW nameplate capacity) — in Gombe State. The power plant was to be equipped with a 132kV step-up station and a 4.7-kilometer transmission line. Powerchina Huadong Engineering Corporation was the general EPC contractor responsible for project implementation. VA Tech Hydro Nigeria Limited was selected as the turbine supplier. A.J. Power System and Services India PVT Ltd. served as a project consultant. Stakeholder identification and vulnerability analysis of existing communities was carried out, as well as implementation and periodic review of the stakeholder engagement plan to address issues of power supply equity in surrounding communities. Project update consultation events were undertaken with communities within the environmental and social areas of influence. Meetings with local stakeholders took place in August 6, 2012 and March 6, 2014. Units 1 and 2 were successfully connected to the grid on December 31, 2019. The project, which was was originally scheduled for completion in October 2018, was officially commissioned in January 2020. The project later became a source of local discontent and controversy. Mabon Ltd was issued a license to generate electricity and evacuate into the national grid as an Independent Power Producer (IPP) by the Nigerian Electricity Regulatory Commission (NERC) but not to distribute power for domestic consumption. When the residents of Dadin Kowa town in Yamaltu Deba and Gombe became frustrated by their inability to access electricity from the power plant, they were told to contact Jos Distribution Company Ltd (JEDC) as their vendor for domestic electricity consumption.

Additional details

1. This project is also known as the 40MW at Dadin Kowa 3 Dam Project and the 40MW at Dadin-Kowa 3 Dam Project. The Chinese project title is 尼日利亚 Dadinkowa 水电站 1#、2#机组 or Dadinkowa 水电站续建总承包项目 or Dadinkowa 水电站. 2. This loan is not included in the SAIS-CARI database of Chinese loan commitments that was released in 2020 and re-released in 2021. 3. The July 2005 concession agreement can be accessed in its entirety via https://www.dropbox.com/s/3fck283njbizqer/Mabon%20Ltd%20Concession%20Agreement%202005.pdf?dl=0. 4. Africa Finance Corporation is a pan-African Multilateral Development Financial Institution established in 2007 by sovereign African states to provide pragmatic solutions to Africa's infrastructure deficit and challenging operating environment. 5. Mabon Ltd received the loan as the project owner, but Powerchina Huadong Engineering Corporation still operates the plant under an operations and maintenance (O&M) agreement until the loan is repaid. 6. Dadinkowa Dam is an earth dam with a concrete spillway containing three gates that control the water level in the reservoir. The inlet to the hydro-electric plant is through penstocks.

Number of official sources

11

Number of total sources

20