China Gives a Dam

The Nigerian government has announced that the China Civil Engineering Corporation will complete a huge hydropower plant in the Mambila region of Taraba state, a plateau near the border with Cameroon. Nigeria currently has a generation capacity of around 10,000 megawatts, but it only generates around 4,000 megawatts annually. The plant, now scheduled to be completed in six years, will have a generation capacity of 3,050 megawatts, with the potential to represent a significant part of Nigeria’s energy mix. The Chinese Export-Import Bank will fund 85 percent of the $5.8 billion construction cost. The Nigerian government will provide the remaining funding—it is currently seeking $5.2 billion from the World Bank to expand power production and distribution. 

The project is highly ambitious. It envisages four dams, one of which would be almost 500 feet in height, and 435 miles of transmission lines.

Shortage of power is a major brake on Nigeria’s economic development. In 2014, a research agency estimated that Nigeria had the lowest per capita electricity consumption rate in Africa, primarily reflecting the lack of availability of power against its huge population. In 2017, Bloomberg estimated that Nigeria’s power generating capacity was less than a third of South Africa’s, though the country’s population is up to four times larger.

The Buhari administration wants to grow the country’s power generation capacity, and the announcement of the hydropower station project appears to be good news, both for Abuja and Beijing. China is providing most of the funding through its Export-Import Bank; the construction will be carried out by a Chinese company likely using mostly Chinese components and Chinese labor. Once completed, the project would almost double the country’s current power generation when operating at capacity. Eventually, of course, Nigeria will be required to repay the loan from the Chinese Import-Export Bank. 

Caution is warranted: Nigeria has a history of large infrastructure and industry projects that remain unfinished or abandoned. Notorious is the Ajaokuta steel mill, construction of which started in 1979 with funding from the Soviet Union. The aspiration was that it would make Nigeria a major steel producer. Construction initially ceased when Nigerian payments stopped to the Soviet contractor, a reflection of the swings in international oil prices. An Indian company took over the project in 2004, but the Nigerian authorities revoked its concession in 2008. The facility has yet to produce any steel in commercially viable quantities. Similarly, the Mambila power project itself has been in the works for almost half a century, with multiple foreign financiers. Now, the Buhari administration is seeking to revive both projects, and additional talks are underway with other Chinese firms on other large projects, notably the Nigerian railway system.