Nigeria seeks $3bn from China for Agric, Rail, Airport Projects

The Federal Government of Nigeria is currently discussing with the Chinese government and its agencies with a view to securing about $3 billion (N480 billion) to complete on-going ‘priority projects’ across the country.

The $3 billion credit from China, according to the government, was part of the $7.9 billion loan proposal President Goodluck Jonathan took to the National Assembly for approval.

President Jonathan had, last week, asked the legislature to approve $7.9 billion credit, proposed to be sourced from the World Bank, African Development Bank, Islamic Bank, China and India.

The proposal, he stated, was part of government’s medium-term external borrowing plan for the next three years (2012-2014).
The Coordinating Minister of the Economy and Finance Minister, Dr. Ngozi Okonjo-Iweala, said in Beijing, China, after the first day of the meeting of a high-powered Nigerian delegation with the Chinese government and investors, that it was necessary to seek the $3 billion credit line to “complete some people-oriented projects”.

Mrs. Okonjo-Iweala explained that the approach of sourcing this particular credit was a clear departure from the past, when most of the projects were not determined by the federal ministries, departments and agencies (MDAs) but the Chinese, who negotiated the credits at varied interest rates - mostly unfavourable to Nigeria.

The government, she noted, had now adopted “systematisation” of negotiation for the credits - for priority projects and at beneficial interest rates - rather than leaving it to the whims and caprices of the Chinese companies and agencies.

“Right now, we have noticed a phenomenon where a lot of Chinese companies come to different ministries and agencies with particular projects they are interested in and then when the MDAs say yes, they sometimes go and help negotiate the credit. But we want to change this because this approach does not always take into account our priorities. When I say systematisation, it means that we outline what our priorities are and we try to negotiate the same beneficial rate for all our projects so that we have a systematic approach,” she said.

The high-powered delegation led by Mrs. Okonjo-Iweala included the Bauchi State Governor, Isa Yuguda; Minister of Agriculture, Dr. Akinwunmi Adesina; Minister of the Federal Capital Territory, Senator Bala Mohammed; Minister of Niger Delta Affairs, Mr. Godsday Orubebe; Minister of Aviation, Mrs. Stella Oduah; Minister of Transport, Senator Idris Umar; Minister of State for Works, Alhaji Bashir Yugudu; Special Adviser to the President on Project Monitoring and Evaluation, Prof. Sylvester Monye; and Managing Director of Galaxy Backbone, Mr. Gerald Ilukwe.

Okonjo-Iweala disclosed that the $3 billion proposed credit line included $500 million financing for four new terminals in Lagos, Abuja, Port Harcourt and Kano and $500 million to complete the Abuja light rail projects.
She added that another $500 million meant for agriculture and $171 million for the completion of Bauchi independent power plant project as well as $100 million to complete Galaxy backbone project, were also included in the Chinese facility.

The finance minister assured them that the credit, which was being sought at not more than 3 per cent concessionary interest rate, in line with the Fiscal Responsibility Act (FRC), was still within the debt-to-GDP ratio of about 20 per cent.

Giving specifics on the nature of some of the projects, Okonjo-Iweala said: “We discussed about the projects that would be particularly beneficial to the population. Examples are the Abuja light rail. We need a better mass transit system in Abuja. So we are here looking at that with the minister of FCT and trying to get the Chinese, who are already working on it to give further support to be able to finish it.

“We are also looking at railway modernisation projects. Again, this has started with the minister of transport so that we can finish setting key lines that on-going Kano-Maiduguri, Lagos-Ibadan, amongst others that need to be modernised.

“Besides, we are looking at aviation, to be able to construct some new terminals in our major airports, Lagos, Kano, Port Harcourt and Abuja. So these are very concrete and specific projects.

“The minister of agriculture is also looking at how to support the ambitious programme of rice production that we have in the country and job creation in the agriculture sector, with particular respect to rice milling and getting rice milling capacity, so that when we produce, we will be able to process,” she added.
Adesina noted that the government expected the whole agricultural transformation efforts to create about 3.5 million jobs over three years.

According to him, 2.5 million jobs are expected to be created from rice and cassava initiatives and one million jobs from cotton, sorghum, palm oil, aquaculture and livestock productions.
He said the government was discussing with the Chinese government to support the country with technology to boost rice and cassava production.

Specifically, he said the Chinese would be assisting Nigeria with the hybrid rice technology, pointing out that with hybrid rice technology, the former was getting yields of 12 tonnes per hectare and that was how they were able to feed themselves.
In fact, he stated that China was able to lift 400 million of her people out of poverty within a decade with agriculture.
Oduah, in her remarks, said the $500 million worth four airport projects would be implemented simultaneously and completed within 13 to 16 months.

According to her, the $500 million was “extremely conservative” for the projects.
In addition, Orubebe, who was in the delegation for financing to complete infrastructural projects in the Niger Delta region, noted: “The east-west road project was awarded in 2006 and it was only in 2009 that we are able to put things straight.  From 12 per cent to 49 per cent completion, the issue has been lack of fund and we cannot take all of them; we want to see that the segment between Warri and Oron is completed. There are other projects that can go along with the annual budget.

“We are looking at N216 billion to complete the project. A little over N100 billion has been spent on that segment alone. If we get what we have come to get, we should be able to complete the project for the Niger Delta and Nigerians.”

For Mohammed: “We have come with very elaborate plan and highly structured and bankable projects for the Chinese to fund within the multilateral facilities they are providing in EXIM Bank, to enhance the Abuja light rail - this has gone far. We started the projects in 2007 and we have provided the counterpart funding.

“We have negotiated up to the level - we are here for formality. We are here to start drawing from the facilities so that the Chinese company, CCECC, that is handling it would get the finance.
“So far, it has gone 52 per cent and we have paid the counterpart requirement of 10 per cent. It is a project of N106 billion and we have already paid N27 billion.”