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Infrastructural forfeiture not part of Nigeria’s loan agreement with China- FG

Nigeria’s loan agreement with China
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With countries like Sri Lanka, Zimbabwe,Djibouti, Zambia, Namibia, Kenya and Angola among other countries present at the verge of forfeiting their infrastructures to China over an unpaid debt, Nigeria’s Minister of Transportation, Rotimi Amaechi, has said that this is not part of Nigerian the loan agreement with China Exim Bank.

Speaking at the 6th Annual East African Transport Infrastructure conference in Nairobi, Kenya, Amaechi on Monday, the minister reassured that the Chinese government would not take over the country’s infrastructure over the inability of the Nigerian government to pay back loan collected from Exim bank.

This assurance is coming at a time when many industry watchers are warning that the assistance from China will come with a price of economic takeover if Nigeria is unable to repay their loan.

Amaechi assured that the agreements between Nigeria and China Exim bank does include property takeover. He added that the inability of some countries to pay back their loan has affected Nigeria in the area of loan assessment from the Chinese government.

‘’I don’t know the arrangement these countries made with Exim bank; I do not think we will have any problems with repaying our loans. The countries that they are talking about are Kenya, Somalia, and Sudan. These are some countries that have not been able to repay their loans, I think. So what they (China) are doing is that they are taking over to manage and get their money, but it’s not so in Nigeria,” he stated.

Amaechi lamented that “If you don’t go to China, who will give you money! America is going to China, even Russia. What is wrong if Nigeria goes to China, I think we should not be afraid of China.”

The Minister expressed that nobody runs railway with passengers’ fare. You can never get one naira out of it. Nigerians just think railway is just to carry passengers, but the problem is that the goods that should be on the rail are the ones on the road and it is destroying the road. He said that once the rail projects are concluded and those goods are transferred to the rail,  that is when the money will start coming in to pay debts.

In a related development, Amaechi said the government was entering into partnership with another Chinese company CCRCCI. The company is to raise 10% of the equity; the federal government will rise 15% of the equity. The remaining 75% is to be borrowed not by the federal government but by the company because the two parties formed a Special Purpose Vehicle (SPV) which they use to run the contract.

“The SPV is a company that will run that contract. It will run the contract, complete it and run the business. They will borrow money to run the business and pay back the loan,” he said.

He added that the Federal Government would give the SPV a sovereign guarantee, for which they, in turn, will give a performance guarantee – that is indicative of what the company is not able to pay back and they call for the Federal Government guarantee, we call for their own performance guarantee. So back to back, the federal government is protected, he explained.

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